Correlation Between CME and Global Brokerage
Can any of the company-specific risk be diversified away by investing in both CME and Global Brokerage 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 CME and Global Brokerage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CME Group and Global Brokerage, you can compare the effects of market volatilities on CME and Global Brokerage 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 CME with a short position of Global Brokerage. Check out your portfolio center. Please also check ongoing floating volatility patterns of CME and Global Brokerage.
Diversification Opportunities for CME and Global Brokerage
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between CME and Global is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding CME Group and Global Brokerage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Brokerage and CME 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 CME Group are associated (or correlated) with Global Brokerage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Brokerage has no effect on the direction of CME i.e., CME and Global Brokerage go up and down completely randomly.
Pair Corralation between CME and Global Brokerage
If you would invest 22,308 in CME Group on September 3, 2024 and sell it today you would earn a total of 1,492 from holding CME Group or generate 6.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 5.0% |
| Values | Daily Returns |
CME Group vs. Global Brokerage
Performance |
| Timeline |
| CME Group |
| Global Brokerage |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
CME and Global Brokerage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CME and Global Brokerage
The main advantage of trading using opposite CME and Global Brokerage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CME position performs unexpectedly, Global Brokerage 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 Global Brokerage will offset losses from the drop in Global Brokerage's long position.The idea behind CME Group and Global Brokerage 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.| Global Brokerage vs. SP Global | Global Brokerage vs. Moodys | Global Brokerage vs. Nasdaq Inc | Global Brokerage vs. CME Group |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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