Correlation Between Tradeweb Markets and CARSALESCOM

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

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

Diversification Opportunities for Tradeweb Markets and CARSALESCOM

0.05

Correlation Coefficient

Tradeweb Markets  CARSALESCOM

Significant diversification

The 3 months correlation between Tradeweb and CARSALESCOM is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Tradeweb Markets and CARSALESCOM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CARSALESCOM 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 CARSALESCOM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CARSALESCOM has no effect on the direction of Tradeweb Markets i.e., Tradeweb Markets and CARSALESCOM go up and down completely randomly.

Pair Corralation between Tradeweb Markets and CARSALESCOM

Assuming the 90 days horizon Tradeweb Markets is expected to generate 0.97 times more return on investment than CARSALESCOM. However, Tradeweb Markets is 1.03 times less risky than CARSALESCOM. It trades about 0.1 of its potential returns per unit of risk. CARSALESCOM is currently generating about 0.01 per unit of risk. If you would invest  10,483  in Tradeweb Markets on December 4, 2024 and sell it today you would earn a total of  2,005  from holding Tradeweb Markets or generate 19.13% return on investment over 90 days.

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

Tradeweb Markets  vs.  CARSALESCOM

Tradeweb Markets

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tradeweb Markets has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

CARSALESCOM

Risk-Adjusted Performance

Very Weak

Over the last 90 days CARSALESCOM has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Tradeweb Markets and CARSALESCOM

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

The idea behind Tradeweb Markets and CARSALESCOM 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.