Correlation Between Tradeweb Markets and Cboe Global

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

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

Diversification Opportunities for Tradeweb Markets and Cboe Global

-0.12

Correlation Coefficient

Tradeweb Markets  Cboe Global

Good diversification

The 3 months correlation between Tradeweb and Cboe is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Tradeweb Markets 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 Tradeweb Markets 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 Tradeweb Markets 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 Tradeweb Markets i.e., Tradeweb Markets and Cboe Global go up and down completely randomly.

Pair Corralation between Tradeweb Markets and Cboe Global

Assuming the 90 days horizon Tradeweb Markets is expected to generate 1.03 times more return on investment than Cboe Global. However, Tradeweb Markets is 1.03 times more volatile than Cboe Global Markets. It trades about 0.23 of its potential returns per unit of risk. Cboe Global Markets is currently generating about 0.08 per unit of risk. If you would invest  11,989  in Tradeweb Markets on December 4, 2024 and sell it today you would earn a total of  1,011  from holding Tradeweb Markets or generate 8.43% return on investment over 90 days.

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

Tradeweb Markets  vs.  Cboe Global Markets

Tradeweb Markets

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tradeweb Markets are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Tradeweb Markets is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Cboe Global Markets

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cboe Global Markets are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Cboe Global is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Tradeweb Markets and Cboe Global

The main advantage of trading using opposite Tradeweb Markets and Cboe Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tradeweb Markets 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 Tradeweb Markets 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.

Check out your portfolio center.

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 Transaction History module to view history of all your transactions and understand their impact on performance.