Correlation Between Cars and Jacquet Metal
Can any of the company-specific risk be diversified away by investing in both Cars and Jacquet Metal 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 Cars and Jacquet Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cars Inc and Jacquet Metal Service, you can compare the effects of market volatilities on Cars and Jacquet Metal 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 Cars with a short position of Jacquet Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cars and Jacquet Metal.
Diversification Opportunities for Cars and Jacquet Metal
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Cars and Jacquet is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Cars Inc and Jacquet Metal Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jacquet Metal Service and Cars 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 Cars Inc are associated (or correlated) with Jacquet Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jacquet Metal Service has no effect on the direction of Cars i.e., Cars and Jacquet Metal go up and down completely randomly.
Pair Corralation between Cars and Jacquet Metal
Assuming the 90 days trading horizon Cars Inc is expected to generate 2.11 times more return on investment than Jacquet Metal. However, Cars is 2.11 times more volatile than Jacquet Metal Service. It trades about 0.32 of its potential returns per unit of risk. Jacquet Metal Service is currently generating about -0.14 per unit of risk. If you would invest 1,596 in Cars Inc on August 26, 2024 and sell it today you would earn a total of 307.00 from holding Cars Inc or generate 19.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 77.27% |
| Values | Daily Returns |
Cars Inc vs. Jacquet Metal Service
Performance |
| Timeline |
| Cars Inc |
| Jacquet Metal Service |
Cars and Jacquet Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cars and Jacquet Metal
The main advantage of trading using opposite Cars and Jacquet Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cars position performs unexpectedly, Jacquet Metal 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 Jacquet Metal will offset losses from the drop in Jacquet Metal's long position.| Cars vs. Samsung Electronics Co | Cars vs. Samsung Electronics Co | Cars vs. Hyundai Motor | Cars vs. Toyota Motor Corp |
| Jacquet Metal vs. Samsung Electronics Co | Jacquet Metal vs. Samsung Electronics Co | Jacquet Metal vs. Hyundai Motor | Jacquet Metal vs. Toyota Motor Corp |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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