Correlation Between Transport International and CME
Can any of the company-specific risk be diversified away by investing in both Transport International 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 Transport International and CME into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transport International Holdings and CME Group, you can compare the effects of market volatilities on Transport International 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 Transport International with a short position of CME. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transport International and CME.
Diversification Opportunities for Transport International and CME
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Transport and CME is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Transport International Holdin and CME Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CME Group and Transport International 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 Transport International Holdings 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 Transport International i.e., Transport International and CME go up and down completely randomly.
Pair Corralation between Transport International and CME
Assuming the 90 days horizon Transport International Holdings is expected to under-perform the CME. In addition to that, Transport International is 1.0 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 0.13 per unit of volatility. If you would invest 21,262 in CME Group on October 26, 2024 and sell it today you would earn a total of 1,133 from holding CME Group or generate 5.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.5% |
| Values | Daily Returns |
Transport International Holdin vs. CME Group
Performance |
| Timeline |
| Transport International |
| CME Group |
Transport International and CME Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transport International and CME
The main advantage of trading using opposite Transport International and CME positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transport International 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.| Transport International vs. PennyMac Mortgage Investment | Transport International vs. AGNC INVESTMENT | Transport International vs. MTY Food Group | Transport International vs. TYSON FOODS A |
| CME vs. United Airlines Holdings | CME vs. OPKO HEALTH | CME vs. EPSILON HEALTHCARE LTD | CME vs. National Health Investors |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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