Correlation Between Deutsche Börse and Cboe Global

Can any of the company-specific risk be diversified away by investing in both Deutsche Börse and Cboe Global 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 Deutsche Börse and Cboe Global into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Deutsche Brse AG and Cboe Global Markets, you can compare the effects of market volatilities on Deutsche Börse and Cboe Global 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 Deutsche Börse with a short position of Cboe Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Börse and Cboe Global.

Diversification Opportunities for Deutsche Börse and Cboe Global

0.7

Correlation Coefficient

Deutsche Börse  Cboe Global

Poor diversification

The 3 months correlation between Deutsche and Cboe is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Brse AG and Cboe Global Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cboe Global Markets and Deutsche Börse 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 Deutsche Brse AG are associated (or correlated) with Cboe Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cboe Global Markets has no effect on the direction of Deutsche Börse i.e., Deutsche Börse and Cboe Global go up and down completely randomly.

Pair Corralation between Deutsche Börse and Cboe Global

Assuming the 90 days trading horizon Deutsche Brse AG is expected to generate 0.62 times more return on investment than Cboe Global. However, Deutsche Brse AG is 1.62 times less risky than Cboe Global. It trades about 0.33 of its potential returns per unit of risk. Cboe Global Markets is currently generating about 0.09 per unit of risk. If you would invest  22,240  in Deutsche Brse AG on December 30, 2024 and sell it today you would earn a total of  4,920  from holding Deutsche Brse AG or generate 22.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Deutsche Brse AG  vs.  Cboe Global Markets

Deutsche Brse AG

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Deutsche Brse AG are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Deutsche Börse unveiled solid returns over the last few months and may actually be approaching a breakup point.

Cboe Global Markets

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cboe Global Markets are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Cboe Global may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Deutsche Börse and Cboe Global

The main advantage of trading using opposite Deutsche Börse and Cboe Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deutsche Börse position performs unexpectedly, Cboe Global 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 Cboe Global will offset losses from the drop in Cboe Global's long position.

The idea behind Deutsche Brse AG and Cboe Global Markets 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.