Correlation Between Piper Sandler and MarketAxess Holdings

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

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

Diversification Opportunities for Piper Sandler and MarketAxess Holdings

-0.25

Correlation Coefficient

Piper Sandler  MarketAxess Holdings

Very good diversification

The 3 months correlation between Piper and MarketAxess is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Piper Sandler Companies and MarketAxess Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MarketAxess Holdings and Piper Sandler 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 Piper Sandler Companies are associated (or correlated) with MarketAxess Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MarketAxess Holdings has no effect on the direction of Piper Sandler i.e., Piper Sandler and MarketAxess Holdings go up and down completely randomly.

Pair Corralation between Piper Sandler and MarketAxess Holdings

Given the investment horizon of 90 days Piper Sandler Companies is expected to generate 0.9 times more return on investment than MarketAxess Holdings. However, Piper Sandler Companies is 1.11 times less risky than MarketAxess Holdings. It trades about 0.09 of its potential returns per unit of risk. MarketAxess Holdings is currently generating about -0.02 per unit of risk. If you would invest  13,705  in Piper Sandler Companies on October 4, 2024 and sell it today you would earn a total of  16,226  from holding Piper Sandler Companies or generate 118.39% return on investment over 90 days.

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

Piper Sandler Companies  vs.  MarketAxess Holdings

Piper Sandler Companies

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Piper Sandler Companies are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Piper Sandler is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

MarketAxess Holdings

Risk-Adjusted Performance

0 of 100

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 weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Piper Sandler and MarketAxess Holdings

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

The idea behind Piper Sandler Companies and MarketAxess Holdings 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.