Correlation Between Tradeweb Markets and FutureTech

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

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

Diversification Opportunities for Tradeweb Markets and FutureTech

-0.47

Correlation Coefficient

Tradeweb Markets  FutureTech

Very good diversification

The 3 months correlation between Tradeweb and FutureTech is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Tradeweb Markets and FutureTech II Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FutureTech II Acquisition 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 FutureTech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FutureTech II Acquisition has no effect on the direction of Tradeweb Markets i.e., Tradeweb Markets and FutureTech go up and down completely randomly.

Pair Corralation between Tradeweb Markets and FutureTech

Allowing for the 90-day total investment horizon Tradeweb Markets is expected to generate 33.96 times less return on investment than FutureTech. But when comparing it to its historical volatility, Tradeweb Markets is 27.51 times less risky than FutureTech. It trades about 0.12 of its potential returns per unit of risk. FutureTech II Acquisition is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  3.14  in FutureTech II Acquisition on September 15, 2024 and sell it today you would lose (0.30) from holding FutureTech II Acquisition or give up 9.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	40.63%
Values	Daily Returns

Tradeweb Markets  vs.  FutureTech II Acquisition

Tradeweb Markets

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tradeweb Markets are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Tradeweb Markets may actually be approaching a critical reversion point that can send shares even higher in January 2025.

FutureTech II Acquisition

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FutureTech II Acquisition are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal forward indicators, FutureTech showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tradeweb Markets and FutureTech

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

The idea behind Tradeweb Markets and FutureTech II Acquisition 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.