Correlation Between Tradeweb Markets and STMICROELECTRONICS

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

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

Diversification Opportunities for Tradeweb Markets and STMICROELECTRONICS

-0.43

Correlation Coefficient

Tradeweb Markets  STMICROELECTRONICS

Very good diversification

The 3 months correlation between Tradeweb and STMICROELECTRONICS is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Tradeweb Markets and STMICROELECTRONICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMICROELECTRONICS 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 STMICROELECTRONICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STMICROELECTRONICS has no effect on the direction of Tradeweb Markets i.e., Tradeweb Markets and STMICROELECTRONICS go up and down completely randomly.

Pair Corralation between Tradeweb Markets and STMICROELECTRONICS

Assuming the 90 days horizon Tradeweb Markets is expected to under-perform the STMICROELECTRONICS. But the stock apears to be less risky and, when comparing its historical volatility, Tradeweb Markets is 1.37 times less risky than STMICROELECTRONICS. The stock trades about -0.02 of its potential returns per unit of risk. The STMICROELECTRONICS is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  2,050  in STMICROELECTRONICS on April 25, 2025 and sell it today you would earn a total of  650.00  from holding STMICROELECTRONICS or generate 31.71% return on investment over 90 days.

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

Tradeweb Markets  vs.  STMICROELECTRONICS

Tradeweb Markets

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tradeweb Markets has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Tradeweb Markets is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

STMICROELECTRONICS

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in STMICROELECTRONICS are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain primary indicators, STMICROELECTRONICS exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tradeweb Markets and STMICROELECTRONICS

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

The idea behind Tradeweb Markets and STMICROELECTRONICS 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.