Correlation Between Tradeweb Markets and Contextlogic

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

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

Diversification Opportunities for Tradeweb Markets and Contextlogic

0.4

Correlation Coefficient

Tradeweb Markets  Contextlogic

Very weak diversification

The 3 months correlation between Tradeweb and Contextlogic is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Tradeweb Markets and Contextlogic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Contextlogic 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 Contextlogic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Contextlogic has no effect on the direction of Tradeweb Markets i.e., Tradeweb Markets and Contextlogic go up and down completely randomly.

Pair Corralation between Tradeweb Markets and Contextlogic

Allowing for the 90-day total investment horizon Tradeweb Markets is expected to under-perform the Contextlogic. But the stock apears to be less risky and, when comparing its historical volatility, Tradeweb Markets is 1.81 times less risky than Contextlogic. The stock trades about -0.04 of its potential returns per unit of risk. The Contextlogic is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  643.00  in Contextlogic on October 24, 2024 and sell it today you would earn a total of  41.00  from holding Contextlogic or generate 6.38% return on investment over 90 days.

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

Tradeweb Markets  vs.  Contextlogic

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. In spite of fairly stable basic indicators, Tradeweb Markets is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Contextlogic

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Contextlogic are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Contextlogic may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Tradeweb Markets and Contextlogic

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

The idea behind Tradeweb Markets and Contextlogic 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.