Correlation Between Raymond James and MarketAxess Holdings

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

By analyzing existing cross correlation between Raymond James Financial and MarketAxess Holdings, you can compare the effects of market volatilities on Raymond James and MarketAxess Holdings 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 Raymond James with a short position of MarketAxess Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Raymond James and MarketAxess Holdings.

Diversification Opportunities for Raymond James and MarketAxess Holdings

0.42

Correlation Coefficient

Raymond James  MarketAxess Holdings

Very weak diversification

The 3 months correlation between Raymond and MarketAxess is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Raymond James Financial and MarketAxess Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MarketAxess Holdings and Raymond James 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 Raymond James Financial are associated (or correlated) with MarketAxess Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MarketAxess Holdings has no effect on the direction of Raymond James i.e., Raymond James and MarketAxess Holdings go up and down completely randomly.

Pair Corralation between Raymond James and MarketAxess Holdings

Considering the 90-day investment horizon Raymond James Financial is expected to generate 2.17 times more return on investment than MarketAxess Holdings. However, Raymond James is 2.17 times more volatile than MarketAxess Holdings. It trades about 0.26 of its potential returns per unit of risk. MarketAxess Holdings is currently generating about -0.46 per unit of risk. If you would invest  14,905  in Raymond James Financial on August 31, 2024 and sell it today you would earn a total of  2,105  from holding Raymond James Financial or generate 14.12% return on investment over 90 days.

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

Raymond James Financial  vs.  MarketAxess Holdings

Raymond James Financial

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Raymond James Financial are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak forward-looking indicators, Raymond James reported solid returns over the last few months and may actually be approaching a breakup point.

MarketAxess Holdings

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MarketAxess Holdings are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, MarketAxess Holdings may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Raymond James and MarketAxess Holdings

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

The idea behind Raymond James Financial and MarketAxess Holdings 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.