Correlation Between Tradeweb Markets and Valvoline

Can any of the company-specific risk be diversified away by investing in both Tradeweb Markets and Valvoline 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 Valvoline into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tradeweb Markets and Valvoline, you can compare the effects of market volatilities on Tradeweb Markets and Valvoline 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 Valvoline. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tradeweb Markets and Valvoline.

Diversification Opportunities for Tradeweb Markets and Valvoline

-0.02

Correlation Coefficient

Tradeweb Markets  Valvoline

Good diversification

The 3 months correlation between Tradeweb and Valvoline is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Tradeweb Markets and Valvoline in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valvoline 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 Valvoline. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valvoline has no effect on the direction of Tradeweb Markets i.e., Tradeweb Markets and Valvoline go up and down completely randomly.

Pair Corralation between Tradeweb Markets and Valvoline

Allowing for the 90-day total investment horizon Tradeweb Markets is expected to generate 0.75 times more return on investment than Valvoline. However, Tradeweb Markets is 1.34 times less risky than Valvoline. It trades about 0.18 of its potential returns per unit of risk. Valvoline is currently generating about -0.02 per unit of risk. If you would invest  11,755  in Tradeweb Markets on September 3, 2024 and sell it today you would earn a total of  1,795  from holding Tradeweb Markets or generate 15.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Tradeweb Markets  vs.  Valvoline

Tradeweb Markets

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tradeweb Markets are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Tradeweb Markets showed solid returns over the last few months and may actually be approaching a breakup point.

Valvoline

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Valvoline has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Valvoline is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Tradeweb Markets and Valvoline

The main advantage of trading using opposite Tradeweb Markets and Valvoline positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tradeweb Markets position performs unexpectedly, Valvoline 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 Valvoline will offset losses from the drop in Valvoline's long position.

The idea behind Tradeweb Markets and Valvoline 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.