Correlation Between Commerce Bancshares and Tradeweb Markets

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

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

Diversification Opportunities for Commerce Bancshares and Tradeweb Markets

-0.36

Correlation Coefficient

Commerce Bancshares  Tradeweb Markets

Very good diversification

The 3 months correlation between Commerce and Tradeweb is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Commerce Bancshares and Tradeweb Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tradeweb Markets and Commerce Bancshares 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 Commerce Bancshares are associated (or correlated) with Tradeweb Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tradeweb Markets has no effect on the direction of Commerce Bancshares i.e., Commerce Bancshares and Tradeweb Markets go up and down completely randomly.

Pair Corralation between Commerce Bancshares and Tradeweb Markets

Assuming the 90 days horizon Commerce Bancshares is expected to under-perform the Tradeweb Markets. But the stock apears to be less risky and, when comparing its historical volatility, Commerce Bancshares is 1.22 times less risky than Tradeweb Markets. The stock trades about -0.06 of its potential returns per unit of risk. The Tradeweb Markets is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  12,789  in Tradeweb Markets on December 23, 2024 and sell it today you would earn a total of  411.00  from holding Tradeweb Markets or generate 3.21% return on investment over 90 days.

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

Commerce Bancshares  vs.  Tradeweb Markets

Commerce Bancshares

Risk-Adjusted Performance

Very Weak

Over the last 90 days Commerce Bancshares has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Commerce Bancshares is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Tradeweb Markets

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tradeweb Markets are ranked lower than 2 (%) 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 newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Commerce Bancshares and Tradeweb Markets

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

The idea behind Commerce Bancshares and Tradeweb 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.