Correlation Between SP Global and Deutsche Boerse

Can any of the company-specific risk be diversified away by investing in both SP Global and Deutsche Boerse at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining SP Global and Deutsche Boerse into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SP Global and Deutsche Boerse AG, you can compare the effects of market volatilities on SP Global and Deutsche Boerse and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in SP Global with a short position of Deutsche Boerse. Check out your portfolio center. Please also check ongoing floating volatility patterns of SP Global and Deutsche Boerse.

Diversification Opportunities for SP Global and Deutsche Boerse

-0.07

Correlation Coefficient

SP Global  Deutsche Boerse

Good diversification

The 3 months correlation between SPGI and Deutsche is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding SP Global and Deutsche Boerse AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Boerse AG and SP Global is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on SP Global are associated (or correlated) with Deutsche Boerse. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Boerse AG has no effect on the direction of SP Global i.e., SP Global and Deutsche Boerse go up and down completely randomly.

Pair Corralation between SP Global and Deutsche Boerse

Given the investment horizon of 90 days SP Global is expected to under-perform the Deutsche Boerse. But the stock apears to be less risky and, when comparing its historical volatility, SP Global is 1.21 times less risky than Deutsche Boerse. The stock trades about -0.15 of its potential returns per unit of risk. The Deutsche Boerse AG is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  2,233  in Deutsche Boerse AG on September 20, 2024 and sell it today you would earn a total of  72.00  from holding Deutsche Boerse AG or generate 3.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

SP Global  vs.  Deutsche Boerse AG

SP Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SP Global has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's technical and fundamental indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Deutsche Boerse AG

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Deutsche Boerse AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Deutsche Boerse is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SP Global and Deutsche Boerse

The main advantage of trading using opposite SP Global and Deutsche Boerse positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SP Global position performs unexpectedly, Deutsche Boerse can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Deutsche Boerse will offset losses from the drop in Deutsche Boerse's long position.

The idea behind SP Global and Deutsche Boerse AG pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Bonds Directory module to find actively traded corporate debentures issued by US companies.