Correlation Between Tradeweb Markets and UNITED

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

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

Diversification Opportunities for Tradeweb Markets and UNITED

0.08

Correlation Coefficient

Tradeweb Markets  UNITED

Significant diversification

The 3 months correlation between Tradeweb and UNITED is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Tradeweb Markets and UNITED NAT FOODS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNITED NAT FOODS 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 UNITED. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNITED NAT FOODS has no effect on the direction of Tradeweb Markets i.e., Tradeweb Markets and UNITED go up and down completely randomly.

Pair Corralation between Tradeweb Markets and UNITED

Allowing for the 90-day total investment horizon Tradeweb Markets is expected to generate 0.46 times more return on investment than UNITED. However, Tradeweb Markets is 2.19 times less risky than UNITED. It trades about 0.18 of its potential returns per unit of risk. UNITED NAT FOODS is currently generating about -0.1 per unit of risk. If you would invest  11,755  in Tradeweb Markets on September 3, 2024 and sell it today you would earn a total of  1,795  from holding Tradeweb Markets or generate 15.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.31%
Values	Daily Returns

Tradeweb Markets  vs.  UNITED NAT FOODS

Tradeweb Markets

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tradeweb Markets are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Tradeweb Markets showed solid returns over the last few months and may actually be approaching a breakup point.

UNITED NAT FOODS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UNITED NAT FOODS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for UNITED NAT FOODS investors.

Pair Trading with Tradeweb Markets and UNITED

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

The idea behind Tradeweb Markets and UNITED NAT FOODS 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.