Correlation Between Tradeweb Markets and Interactive Brokers
Can any of the company-specific risk be diversified away by investing in both Tradeweb Markets and Interactive Brokers 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 Interactive Brokers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tradeweb Markets and Interactive Brokers Group, you can compare the effects of market volatilities on Tradeweb Markets and Interactive Brokers 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 Interactive Brokers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tradeweb Markets and Interactive Brokers.
Diversification Opportunities for Tradeweb Markets and Interactive Brokers
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tradeweb and Interactive is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Tradeweb Markets and Interactive Brokers Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Interactive Brokers 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 Interactive Brokers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Interactive Brokers has no effect on the direction of Tradeweb Markets i.e., Tradeweb Markets and Interactive Brokers go up and down completely randomly.
Pair Corralation between Tradeweb Markets and Interactive Brokers
Allowing for the 90-day total investment horizon Tradeweb Markets is expected to generate 1.33 times less return on investment than Interactive Brokers. But when comparing it to its historical volatility, Tradeweb Markets is 1.14 times less risky than Interactive Brokers. It trades about 0.11 of its potential returns per unit of risk. Interactive Brokers Group is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 6,903 in Interactive Brokers Group on September 5, 2024 and sell it today you would earn a total of 11,786 from holding Interactive Brokers Group or generate 170.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tradeweb Markets vs. Interactive Brokers Group
Performance |
| Timeline |
| Tradeweb Markets |
| Interactive Brokers |
Tradeweb Markets and Interactive Brokers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tradeweb Markets and Interactive Brokers
The main advantage of trading using opposite Tradeweb Markets and Interactive Brokers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tradeweb Markets position performs unexpectedly, Interactive Brokers 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 Interactive Brokers will offset losses from the drop in Interactive Brokers' long position.| Tradeweb Markets vs. Interactive Brokers Group | Tradeweb Markets vs. Evercore Partners | Tradeweb Markets vs. PJT Partners | Tradeweb Markets vs. LPL Financial Holdings |
| Interactive Brokers vs. Applied Blockchain | Interactive Brokers vs. Hut 8 Corp | Interactive Brokers vs. Bitfarms | Interactive Brokers vs. Evercore Partners |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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