Correlation Between SIDETRADE and Cboe Global

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

By analyzing existing cross correlation between SIDETRADE EO 1 and Cboe Global Markets, you can compare the effects of market volatilities on SIDETRADE 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 SIDETRADE with a short position of Cboe Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIDETRADE and Cboe Global.

Diversification Opportunities for SIDETRADE and Cboe Global

0.77

Correlation Coefficient

SIDETRADE  Cboe Global

Poor diversification

The 3 months correlation between SIDETRADE and Cboe is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding SIDETRADE EO 1 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 SIDETRADE 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 SIDETRADE EO 1 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 SIDETRADE i.e., SIDETRADE and Cboe Global go up and down completely randomly.

Pair Corralation between SIDETRADE and Cboe Global

Assuming the 90 days horizon SIDETRADE is expected to generate 1.07 times less return on investment than Cboe Global. In addition to that, SIDETRADE is 1.61 times more volatile than Cboe Global Markets. It trades about 0.05 of its total potential returns per unit of risk. Cboe Global Markets is currently generating about 0.09 per unit of volatility. If you would invest  18,739  in Cboe Global Markets on December 29, 2024 and sell it today you would earn a total of  1,541  from holding Cboe Global Markets or generate 8.22% return on investment over 90 days.

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

SIDETRADE EO 1  vs.  Cboe Global Markets

SIDETRADE EO 1

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SIDETRADE EO 1 are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, SIDETRADE may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Cboe Global Markets

Risk-Adjusted Performance

Modest

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

Pair Trading with SIDETRADE and Cboe Global

The main advantage of trading using opposite SIDETRADE and Cboe Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIDETRADE 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 SIDETRADE EO 1 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.

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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.