Correlation Between TMX Group and CME
Can any of the company-specific risk be diversified away by investing in both TMX Group 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 TMX Group and CME into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TMX Group Limited and CME Group, you can compare the effects of market volatilities on TMX Group 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 TMX Group with a short position of CME. Check out your portfolio center. Please also check ongoing floating volatility patterns of TMX Group and CME.
Diversification Opportunities for TMX Group and CME
Very good diversification
The 3 months correlation between TMX and CME is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding TMX Group Limited and CME Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CME Group and TMX Group 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 TMX Group Limited 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 TMX Group i.e., TMX Group and CME go up and down completely randomly.
Pair Corralation between TMX Group and CME
Assuming the 90 days horizon TMX Group Limited is expected to under-perform the CME. In addition to that, TMX Group is 4.4 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 0.08 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 Against |
| Strength | Insignificant |
| Accuracy | 93.05% |
| Values | Daily Returns |
TMX Group Limited vs. CME Group
Performance |
| Timeline |
| TMX Group Limited |
| CME Group |
TMX Group and CME Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TMX Group and CME
The main advantage of trading using opposite TMX Group and CME positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TMX Group 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.| TMX Group vs. HUMANA INC | TMX Group vs. SCOR PK | TMX Group vs. Aquagold International | TMX Group vs. Thrivent High Yield |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated |