Correlation Between Tradeweb Markets and OmniAb

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

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

Diversification Opportunities for Tradeweb Markets and OmniAb

0.04

Correlation Coefficient

Tradeweb Markets  OmniAb

Significant diversification

The 3 months correlation between Tradeweb and OmniAb is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Tradeweb Markets and OmniAb Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OmniAb Inc 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 OmniAb. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OmniAb Inc has no effect on the direction of Tradeweb Markets i.e., Tradeweb Markets and OmniAb go up and down completely randomly.

Pair Corralation between Tradeweb Markets and OmniAb

Allowing for the 90-day total investment horizon Tradeweb Markets is expected to generate 5.32 times less return on investment than OmniAb. But when comparing it to its historical volatility, Tradeweb Markets is 10.89 times less risky than OmniAb. It trades about 0.12 of its potential returns per unit of risk. OmniAb Inc is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  34.00  in OmniAb Inc on December 28, 2024 and sell it today you would lose (2.97) from holding OmniAb Inc or give up 8.74% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	63.93%
Values	Daily Returns

Tradeweb Markets  vs.  OmniAb Inc

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 weak basic indicators, Tradeweb Markets may actually be approaching a critical reversion point that can send shares even higher in April 2025.

OmniAb Inc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in OmniAb Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent forward indicators, OmniAb showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tradeweb Markets and OmniAb

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

The idea behind Tradeweb Markets and OmniAb Inc 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.