Correlation Between Bayer AG and Tradeweb Markets
Can any of the company-specific risk be diversified away by investing in both Bayer AG and Tradeweb Markets 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 Bayer AG and Tradeweb Markets into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bayer AG and Tradeweb Markets, you can compare the effects of market volatilities on Bayer AG and Tradeweb Markets 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 Bayer AG with a short position of Tradeweb Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bayer AG and Tradeweb Markets.
Diversification Opportunities for Bayer AG and Tradeweb Markets
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bayer and Tradeweb is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Bayer AG and Tradeweb Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tradeweb Markets and Bayer AG 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 Bayer AG are associated (or correlated) with Tradeweb Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tradeweb Markets has no effect on the direction of Bayer AG i.e., Bayer AG and Tradeweb Markets go up and down completely randomly.
Pair Corralation between Bayer AG and Tradeweb Markets
Assuming the 90 days horizon Bayer AG is expected to under-perform the Tradeweb Markets. In addition to that, Bayer AG is 1.69 times more volatile than Tradeweb Markets. It trades about -0.11 of its total potential returns per unit of risk. Tradeweb Markets is currently generating about 0.14 per unit of volatility. If you would invest 7,047 in Tradeweb Markets on August 31, 2024 and sell it today you would earn a total of 6,503 from holding Tradeweb Markets or generate 92.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.47% |
| Values | Daily Returns |
Bayer AG vs. Tradeweb Markets
Performance |
| Timeline |
| Bayer AG |
| Tradeweb Markets |
Bayer AG and Tradeweb Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bayer AG and Tradeweb Markets
The main advantage of trading using opposite Bayer AG and Tradeweb Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bayer AG position performs unexpectedly, Tradeweb Markets 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 Tradeweb Markets will offset losses from the drop in Tradeweb Markets' long position.| Bayer AG vs. Broadstone Net Lease | Bayer AG vs. Akanda Corp | Bayer AG vs. Alvotech | Bayer AG vs. Aquestive Therapeutics |
| Tradeweb Markets vs. Raymond James Financial | Tradeweb Markets vs. PJT Partners | Tradeweb Markets vs. Moelis Co | Tradeweb Markets vs. LPL Financial Holdings |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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