Correlation Between MarketAxess Holdings and Cboe Global

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

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

Diversification Opportunities for MarketAxess Holdings and Cboe Global

-0.47

Correlation Coefficient

MarketAxess Holdings  Cboe Global

Very good diversification

The 3 months correlation between MarketAxess and Cboe is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding MarketAxess Holdings 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 MarketAxess Holdings 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 MarketAxess Holdings 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 MarketAxess Holdings i.e., MarketAxess Holdings and Cboe Global go up and down completely randomly.

Pair Corralation between MarketAxess Holdings and Cboe Global

Given the investment horizon of 90 days MarketAxess Holdings is expected to under-perform the Cboe Global. In addition to that, MarketAxess Holdings is 1.27 times more volatile than Cboe Global Markets. It trades about -0.01 of its total potential returns per unit of risk. Cboe Global Markets is currently generating about 0.16 per unit of volatility. If you would invest  19,534  in Cboe Global Markets on December 29, 2024 and sell it today you would earn a total of  2,734  from holding Cboe Global Markets or generate 14.0% return on investment over 90 days.

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

MarketAxess Holdings  vs.  Cboe Global Markets

MarketAxess Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days MarketAxess Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, MarketAxess Holdings is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Cboe Global Markets

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cboe Global Markets are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Cboe Global exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MarketAxess Holdings and Cboe Global

The main advantage of trading using opposite MarketAxess Holdings and Cboe Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MarketAxess Holdings 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 MarketAxess Holdings 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.