Correlation Between National Retail and Tradeweb Markets

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

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

Diversification Opportunities for National Retail and Tradeweb Markets

-0.21

Correlation Coefficient

National Retail  Tradeweb Markets

Very good diversification

The 3 months correlation between National and Tradeweb is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding National Retail Properties and Tradeweb Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tradeweb Markets and National Retail 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 National Retail Properties 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 National Retail i.e., National Retail and Tradeweb Markets go up and down completely randomly.

Pair Corralation between National Retail and Tradeweb Markets

Assuming the 90 days trading horizon National Retail Properties is expected to generate 0.84 times more return on investment than Tradeweb Markets. However, National Retail Properties is 1.19 times less risky than Tradeweb Markets. It trades about -0.16 of its potential returns per unit of risk. Tradeweb Markets is currently generating about -0.2 per unit of risk. If you would invest  3,918  in National Retail Properties on October 26, 2024 and sell it today you would lose (147.00) from holding National Retail Properties or give up 3.75% of portfolio value over 90 days.

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

National Retail Properties  vs.  Tradeweb Markets

National Retail Prop

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days National Retail Properties has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Tradeweb Markets

Risk-Adjusted Performance

0 of 100

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 newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with National Retail and Tradeweb Markets

The main advantage of trading using opposite National Retail and Tradeweb Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Retail 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 National Retail Properties 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.