Correlation Between Tradeweb Markets and AUTO TRADER

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

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

Diversification Opportunities for Tradeweb Markets and AUTO TRADER

0.75

Correlation Coefficient

Tradeweb Markets  AUTO TRADER

Poor diversification

The 3 months correlation between Tradeweb and AUTO is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Tradeweb Markets and AUTO TRADER ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AUTO TRADER ADR 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 AUTO TRADER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AUTO TRADER ADR has no effect on the direction of Tradeweb Markets i.e., Tradeweb Markets and AUTO TRADER go up and down completely randomly.

Pair Corralation between Tradeweb Markets and AUTO TRADER

Assuming the 90 days horizon Tradeweb Markets is expected to generate 1.54 times less return on investment than AUTO TRADER. But when comparing it to its historical volatility, Tradeweb Markets is 1.21 times less risky than AUTO TRADER. It trades about 0.04 of its potential returns per unit of risk. AUTO TRADER ADR is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  210.00  in AUTO TRADER ADR on April 20, 2025 and sell it today you would earn a total of  12.00  from holding AUTO TRADER ADR or generate 5.71% 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.  AUTO TRADER ADR

Tradeweb Markets

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tradeweb Markets are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Tradeweb Markets is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

AUTO TRADER ADR

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AUTO TRADER ADR are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, AUTO TRADER may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Tradeweb Markets and AUTO TRADER

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

The idea behind Tradeweb Markets and AUTO TRADER ADR 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.

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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.