Correlation Between Deutsche Boerse and Brambles

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

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

Diversification Opportunities for Deutsche Boerse and Brambles

-0.31

Correlation Coefficient

Deutsche Boerse  Brambles

Very good diversification

The 3 months correlation between Deutsche and Brambles is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Boerse AG and Brambles Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brambles ADR and Deutsche Boerse 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 Boerse AG are associated (or correlated) with Brambles. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brambles ADR has no effect on the direction of Deutsche Boerse i.e., Deutsche Boerse and Brambles go up and down completely randomly.

Pair Corralation between Deutsche Boerse and Brambles

Assuming the 90 days horizon Deutsche Boerse AG is expected to generate 0.73 times more return on investment than Brambles. However, Deutsche Boerse AG is 1.37 times less risky than Brambles. It trades about 0.35 of its potential returns per unit of risk. Brambles Ltd ADR is currently generating about 0.01 per unit of risk. If you would invest  2,314  in Deutsche Boerse AG on October 25, 2024 and sell it today you would earn a total of  132.00  from holding Deutsche Boerse AG or generate 5.7% return on investment over 90 days.

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

Deutsche Boerse AG  vs.  Brambles Ltd ADR

Deutsche Boerse AG

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Deutsche Boerse AG are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. 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.

Brambles ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brambles Ltd ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong essential indicators, Brambles is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Deutsche Boerse and Brambles

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

The idea behind Deutsche Boerse AG and Brambles Ltd ADR 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.