Correlation Between Tradeweb Markets and American Express
Can any of the company-specific risk be diversified away by investing in both Tradeweb Markets and American Express 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 Tradeweb Markets and American Express into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tradeweb Markets and American Express, you can compare the effects of market volatilities on Tradeweb Markets and American Express 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 Tradeweb Markets with a short position of American Express. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tradeweb Markets and American Express.
Diversification Opportunities for Tradeweb Markets and American Express
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Tradeweb and American is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Tradeweb Markets and American Express in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Express and Tradeweb 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 Tradeweb Markets are associated (or correlated) with American Express. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Express has no effect on the direction of Tradeweb Markets i.e., Tradeweb Markets and American Express go up and down completely randomly.
Pair Corralation between Tradeweb Markets and American Express
Allowing for the 90-day total investment horizon Tradeweb Markets is expected to generate 2.94 times less return on investment than American Express. But when comparing it to its historical volatility, Tradeweb Markets is 1.64 times less risky than American Express. It trades about 0.14 of its potential returns per unit of risk. American Express is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 27,147 in American Express on August 27, 2024 and sell it today you would earn a total of 2,983 from holding American Express or generate 10.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tradeweb Markets vs. American Express
Performance |
| Timeline |
| Tradeweb Markets |
| American Express |
Tradeweb Markets and American Express Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tradeweb Markets and American Express
The main advantage of trading using opposite Tradeweb Markets and American Express positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tradeweb Markets position performs unexpectedly, American Express 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 American Express will offset losses from the drop in American Express' long position.| Tradeweb Markets vs. Raymond James Financial | Tradeweb Markets vs. PJT Partners | Tradeweb Markets vs. Moelis Co | Tradeweb Markets vs. LPL Financial Holdings |
| American Express vs. SLM Corp | American Express vs. Orix Corp Ads | American Express vs. FirstCash | American Express vs. Medallion Financial Corp |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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