Correlation Between Cable One and CME
Can any of the company-specific risk be diversified away by investing in both Cable One and CME 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 Cable One and CME into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cable One and CME Group, you can compare the effects of market volatilities on Cable One and CME 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 Cable One with a short position of CME. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cable One and CME.
Diversification Opportunities for Cable One and CME
Very weak diversification
The 3 months correlation between Cable and CME is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Cable One and CME Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CME Group and Cable One 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 Cable One are associated (or correlated) with CME. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CME Group has no effect on the direction of Cable One i.e., Cable One and CME go up and down completely randomly.
Pair Corralation between Cable One and CME
Assuming the 90 days trading horizon Cable One is expected to under-perform the CME. In addition to that, Cable One is 2.47 times more volatile than CME Group. It trades about -0.02 of its total potential returns per unit of risk. CME Group is currently generating about 0.07 per unit of volatility. If you would invest 22,342 in CME Group on September 2, 2024 and sell it today you would earn a total of 10,857 from holding CME Group or generate 48.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 68.55% |
| Values | Daily Returns |
Cable One vs. CME Group
Performance |
| Timeline |
| Cable One |
| CME Group |
Cable One and CME Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cable One and CME
The main advantage of trading using opposite Cable One and CME positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cable One position performs unexpectedly, CME 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 CME will offset losses from the drop in CME's long position.| Cable One vs. Charter Communications | Cable One vs. Iron Mountain Incorporated | Cable One vs. Livetech da Bahia | Cable One vs. Taiwan Semiconductor Manufacturing |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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