Correlation Between Tradeweb Markets and Coupang LLC

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

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

Diversification Opportunities for Tradeweb Markets and Coupang LLC

-0.1

Correlation Coefficient

Tradeweb Markets  Coupang LLC

Good diversification

The 3 months correlation between Tradeweb and Coupang is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Tradeweb Markets and Coupang LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coupang LLC and Tradeweb Markets 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 Tradeweb Markets are associated (or correlated) with Coupang LLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coupang LLC has no effect on the direction of Tradeweb Markets i.e., Tradeweb Markets and Coupang LLC go up and down completely randomly.

Pair Corralation between Tradeweb Markets and Coupang LLC

Allowing for the 90-day total investment horizon Tradeweb Markets is expected to generate 0.73 times more return on investment than Coupang LLC. However, Tradeweb Markets is 1.37 times less risky than Coupang LLC. It trades about 0.12 of its potential returns per unit of risk. Coupang LLC is currently generating about 0.06 per unit of risk. If you would invest  13,300  in Tradeweb Markets on December 29, 2024 and sell it today you would earn a total of  1,326  from holding Tradeweb Markets or generate 9.97% return on investment over 90 days.

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

Tradeweb Markets  vs.  Coupang LLC

Tradeweb Markets

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tradeweb Markets are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Tradeweb Markets may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Coupang LLC

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Coupang LLC are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent basic indicators, Coupang LLC may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Tradeweb Markets and Coupang LLC

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

The idea behind Tradeweb Markets and Coupang LLC 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.

Check out your portfolio center.

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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.