PT - JOURNAL ARTICLE AU - Thomas O. Miller AU - Michael S. Pagano TI - Who Wants to Dance? AID - 10.3905/jot.2007.682140 DP - 2007 Mar 31 TA - The Journal of Trading PG - 63--72 VI - 2 IP - 2 4099 - https://pm-research.com/content/2/2/63.short 4100 - https://pm-research.com/content/2/2/63.full AB - Due to the recent transformation of many securities exchanges into for-profit, publicly traded companies, we use portfolio theory and historical risk-return relationships to consider several scenarios (78 in total) based on hypothetical mergers between all possible pairings of these exchanges. We identify both the “best” and “worst” merger pairs solely based on these risk-return and correlation patterns, and thus do not include potential merger synergies related to economies of scale or scope. The analysis presented here thus provides an objective measure of the relative attractiveness of various mergers to investors in a relatively new but rapidly growing investment sector: for-profit securities exchanges. We find that Asian Pacific exchanges such as those based in Australia and Singapore consistently represent the strongest combinations of risk and return. In North America, the mergers associated with the Toronto Stock Exchange and Chicago Mercantile Exchange offer the best risk-return relationships. Overall, our approach suggests there is considerable variation in the risk-return characteristics of passively managed mergers of securities exchanges and that the “best” pairings typically include an Asian Pacific exchange as a partner whereas some of the weaker hypothetical mergers include European and / or North American exchanges.TOPICS: Portfolio theory, technical analysis, simulations, emerging