Correlation Between Otc Markets and CME
Can any of the company-specific risk be diversified away by investing in both Otc Markets 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 Otc Markets and CME into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Otc Markets Group and CME Group, you can compare the effects of market volatilities on Otc Markets 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 Otc Markets with a short position of CME. Check out your portfolio center. Please also check ongoing floating volatility patterns of Otc Markets and CME.
Diversification Opportunities for Otc Markets and CME
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Otc and CME is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Otc Markets Group and CME Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CME Group and Otc Markets 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 Otc Markets Group 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 Otc Markets i.e., Otc Markets and CME go up and down completely randomly.
Pair Corralation between Otc Markets and CME
Given the investment horizon of 90 days Otc Markets is expected to generate 6.87 times less return on investment than CME. In addition to that, Otc Markets is 1.57 times more volatile than CME Group. It trades about 0.01 of its total potential returns per unit of risk. CME Group is currently generating about 0.08 per unit of volatility. If you would invest 17,614 in CME Group on August 31, 2024 and sell it today you would earn a total of 6,186 from holding CME Group or generate 35.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.47% |
| Values | Daily Returns |
Otc Markets Group vs. CME Group
Performance |
| Timeline |
| Otc Markets Group |
| CME Group |
Otc Markets and CME Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Otc Markets and CME
The main advantage of trading using opposite Otc Markets and CME positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Otc Markets 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.| Otc Markets vs. Winmark | Otc Markets vs. Diamond Hill Investment | Otc Markets vs. Crimson Wine | Otc Markets vs. Bank of NT |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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