Correlation Between MarketAxess Holdings and Stifel Financial

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

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

Diversification Opportunities for MarketAxess Holdings and Stifel Financial

-0.65

Correlation Coefficient

MarketAxess Holdings  Stifel Financial

Excellent diversification

The 3 months correlation between MarketAxess and Stifel is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding MarketAxess Holdings and Stifel Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stifel Financial and MarketAxess Holdings 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 MarketAxess Holdings are associated (or correlated) with Stifel Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stifel Financial has no effect on the direction of MarketAxess Holdings i.e., MarketAxess Holdings and Stifel Financial go up and down completely randomly.

Pair Corralation between MarketAxess Holdings and Stifel Financial

Given the investment horizon of 90 days MarketAxess Holdings is expected to under-perform the Stifel Financial. But the stock apears to be less risky and, when comparing its historical volatility, MarketAxess Holdings is 1.13 times less risky than Stifel Financial. The stock trades about -0.09 of its potential returns per unit of risk. The Stifel Financial is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  8,856  in Stifel Financial on May 7, 2025 and sell it today you would earn a total of  2,364  from holding Stifel Financial or generate 26.69% return on investment over 90 days.

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

MarketAxess Holdings  vs.  Stifel Financial

MarketAxess Holdings

Risk-Adjusted Performance

Weakest

Over the last 90 days MarketAxess Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Stifel Financial

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Stifel Financial are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Stifel Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MarketAxess Holdings and Stifel Financial

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

The idea behind MarketAxess Holdings and Stifel Financial 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.