Correlation Between CME and MARKET VECTR
Can any of the company-specific risk be diversified away by investing in both CME and MARKET VECTR 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 MARKET VECTR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CME Group and MARKET VECTR RETAIL, you can compare the effects of market volatilities on CME and MARKET VECTR 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 MARKET VECTR. Check out your portfolio center. Please also check ongoing floating volatility patterns of CME and MARKET VECTR.
Diversification Opportunities for CME and MARKET VECTR
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between CME and MARKET is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding CME Group and MARKET VECTR RETAIL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MARKET VECTR RETAIL 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 MARKET VECTR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MARKET VECTR RETAIL has no effect on the direction of CME i.e., CME and MARKET VECTR go up and down completely randomly.
Pair Corralation between CME and MARKET VECTR
Assuming the 90 days trading horizon CME Group is expected to generate 2.18 times more return on investment than MARKET VECTR. However, CME is 2.18 times more volatile than MARKET VECTR RETAIL. It trades about -0.12 of its potential returns per unit of risk. MARKET VECTR RETAIL is currently generating about -0.39 per unit of risk. If you would invest 22,465 in CME Group on October 10, 2024 and sell it today you would lose (575.00) from holding CME Group or give up 2.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
CME Group vs. MARKET VECTR RETAIL
Performance |
| Timeline |
| CME Group |
| MARKET VECTR RETAIL |
CME and MARKET VECTR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CME and MARKET VECTR
The main advantage of trading using opposite CME and MARKET VECTR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CME position performs unexpectedly, MARKET VECTR 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 MARKET VECTR will offset losses from the drop in MARKET VECTR's long position.The idea behind CME Group and MARKET VECTR RETAIL 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.| MARKET VECTR vs. GigaMedia | MARKET VECTR vs. SBI Insurance Group | MARKET VECTR vs. Ubisoft Entertainment SA | MARKET VECTR vs. LIFENET INSURANCE CO |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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