Correlation Between Cboe Global and CME
Can any of the company-specific risk be diversified away by investing in both Cboe Global 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 Cboe Global and CME into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cboe Global Markets and CME Group, you can compare the effects of market volatilities on Cboe Global 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 Cboe Global with a short position of CME. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cboe Global and CME.
Diversification Opportunities for Cboe Global and CME
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cboe and CME is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Cboe Global Markets and CME Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CME Group and Cboe Global 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 Cboe Global Markets 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 Cboe Global i.e., Cboe Global and CME go up and down completely randomly.
Pair Corralation between Cboe Global and CME
Given the investment horizon of 90 days Cboe Global Markets is expected to generate 0.77 times more return on investment than CME. However, Cboe Global Markets is 1.31 times less risky than CME. It trades about 0.06 of its potential returns per unit of risk. CME Group is currently generating about 0.02 per unit of risk. If you would invest 19,310 in Cboe Global Markets on October 22, 2024 and sell it today you would earn a total of 168.00 from holding Cboe Global Markets or generate 0.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cboe Global Markets vs. CME Group
Performance |
| Timeline |
| Cboe Global Markets |
| CME Group |
Cboe Global and CME Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cboe Global and CME
The main advantage of trading using opposite Cboe Global and CME positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cboe Global 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.| Cboe Global vs. CME Group | Cboe Global vs. MarketAxess Holdings | Cboe Global vs. Intercontinental Exchange | Cboe Global vs. Allegion PLC |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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