Correlation Between Global Ship and Tradeweb Markets
Can any of the company-specific risk be diversified away by investing in both Global Ship 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 Global Ship and Tradeweb Markets into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Ship Lease and Tradeweb Markets, you can compare the effects of market volatilities on Global Ship 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 Global Ship with a short position of Tradeweb Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Ship and Tradeweb Markets.
Diversification Opportunities for Global Ship and Tradeweb Markets
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Global and Tradeweb is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Global Ship Lease and Tradeweb Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tradeweb Markets and Global Ship 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 Global Ship Lease 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 Global Ship i.e., Global Ship and Tradeweb Markets go up and down completely randomly.
Pair Corralation between Global Ship and Tradeweb Markets
Assuming the 90 days trading horizon Global Ship is expected to generate 4.08 times less return on investment than Tradeweb Markets. But when comparing it to its historical volatility, Global Ship Lease is 1.53 times less risky than Tradeweb Markets. It trades about 0.05 of its potential returns per unit of risk. Tradeweb Markets is currently generating about 0.14 of returns per unit of risk over similar time horizon. 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 Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Ship Lease vs. Tradeweb Markets
Performance |
| Timeline |
| Global Ship Lease |
| Tradeweb Markets |
Global Ship and Tradeweb Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Ship and Tradeweb Markets
The main advantage of trading using opposite Global Ship and Tradeweb Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Ship 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.The idea behind Global Ship Lease and Tradeweb Markets 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.| 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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