Correlation Between Charter Communications and Auto Trader
Can any of the company-specific risk be diversified away by investing in both Charter Communications and Auto Trader 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 Charter Communications and Auto Trader into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Charter Communications Cl and Auto Trader Group, you can compare the effects of market volatilities on Charter Communications and Auto Trader 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 Charter Communications with a short position of Auto Trader. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charter Communications and Auto Trader.
Diversification Opportunities for Charter Communications and Auto Trader
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Charter and Auto is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Charter Communications Cl and Auto Trader Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auto Trader Group and Charter Communications 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 Charter Communications Cl are associated (or correlated) with Auto Trader. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auto Trader Group has no effect on the direction of Charter Communications i.e., Charter Communications and Auto Trader go up and down completely randomly.
Pair Corralation between Charter Communications and Auto Trader
Assuming the 90 days trading horizon Charter Communications Cl is expected to under-perform the Auto Trader. In addition to that, Charter Communications is 1.58 times more volatile than Auto Trader Group. It trades about 0.0 of its total potential returns per unit of risk. Auto Trader Group is currently generating about 0.05 per unit of volatility. If you would invest 57,251 in Auto Trader Group on October 12, 2024 and sell it today you would earn a total of 20,169 from holding Auto Trader Group or generate 35.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.01% |
| Values | Daily Returns |
Charter Communications Cl vs. Auto Trader Group
Performance |
| Timeline |
| Charter Communications |
| Auto Trader Group |
Charter Communications and Auto Trader Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charter Communications and Auto Trader
The main advantage of trading using opposite Charter Communications and Auto Trader positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charter Communications position performs unexpectedly, Auto Trader 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 Auto Trader will offset losses from the drop in Auto Trader's long position.| Charter Communications vs. Europa Metals | Charter Communications vs. Coeur Mining | Charter Communications vs. Heavitree Brewery | Charter Communications vs. Monster Beverage Corp |
| Auto Trader vs. Batm Advanced Communications | Auto Trader vs. Ecclesiastical Insurance Office | Auto Trader vs. Charter Communications Cl | Auto Trader vs. InterContinental Hotels Group |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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