Correlation Between Tradeweb Markets and CNH Industrial

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Can any of the company-specific risk be diversified away by investing in both Tradeweb Markets and CNH Industrial 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 CNH Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tradeweb Markets and CNH Industrial NV, you can compare the effects of market volatilities on Tradeweb Markets and CNH Industrial 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 CNH Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tradeweb Markets and CNH Industrial.

Diversification Opportunities for Tradeweb Markets and CNH Industrial

TradewebCNHDiversified AwayTradewebCNHDiversified Away100%
-0.35
  Correlation Coefficient

Very good diversification

The 3 months correlation between Tradeweb and CNH is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Tradeweb Markets and CNH Industrial NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNH Industrial NV 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 CNH Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CNH Industrial NV has no effect on the direction of Tradeweb Markets i.e., Tradeweb Markets and CNH Industrial go up and down completely randomly.

Pair Corralation between Tradeweb Markets and CNH Industrial

Allowing for the 90-day total investment horizon Tradeweb Markets is expected to generate 0.71 times more return on investment than CNH Industrial. However, Tradeweb Markets is 1.4 times less risky than CNH Industrial. It trades about 0.1 of its potential returns per unit of risk. CNH Industrial NV is currently generating about 0.01 per unit of risk. If you would invest  7,132  in Tradeweb Markets on November 27, 2024 and sell it today you would earn a total of  6,283  from holding Tradeweb Markets or generate 88.1% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Tradeweb Markets  vs.  CNH Industrial NV

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -505101520
JavaScript chart by amCharts 3.21.15TW CNH
       Timeline  
Tradeweb Markets 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Tradeweb Markets has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Tradeweb Markets is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb125130135140
CNH Industrial NV 

Risk-Adjusted Performance

Insignificant

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in CNH Industrial NV are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, CNH Industrial is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb1111.51212.51313.5

Tradeweb Markets and CNH Industrial Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-4.39-3.29-2.18-1.080.01841.092.223.354.485.61 0.050.100.150.20
JavaScript chart by amCharts 3.21.15TW CNH
       Returns  

Pair Trading with Tradeweb Markets and CNH Industrial

The main advantage of trading using opposite Tradeweb Markets and CNH Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tradeweb Markets position performs unexpectedly, CNH Industrial 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 CNH Industrial will offset losses from the drop in CNH Industrial's long position.
The idea behind Tradeweb Markets and CNH Industrial NV 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.
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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.

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