Correlation Between Tradeweb Markets and FedEx

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

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

Diversification Opportunities for Tradeweb Markets and FedEx

0.69

Correlation Coefficient

Tradeweb Markets  FedEx

Poor diversification

The 3 months correlation between Tradeweb and FedEx is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Tradeweb Markets and FedEx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FedEx 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 FedEx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FedEx has no effect on the direction of Tradeweb Markets i.e., Tradeweb Markets and FedEx go up and down completely randomly.

Pair Corralation between Tradeweb Markets and FedEx

Assuming the 90 days horizon Tradeweb Markets is expected to generate 1.63 times less return on investment than FedEx. But when comparing it to its historical volatility, Tradeweb Markets is 1.15 times less risky than FedEx. It trades about 0.08 of its potential returns per unit of risk. FedEx is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  23,596  in FedEx on October 8, 2024 and sell it today you would earn a total of  2,994  from holding FedEx or generate 12.69% return on investment over 90 days.

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

Tradeweb Markets  vs.  FedEx

Tradeweb Markets

Risk-Adjusted Performance

6 of 100

Modest

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

FedEx

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FedEx are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, FedEx reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tradeweb Markets and FedEx

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

The idea behind Tradeweb Markets and FedEx 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.