Correlation Between Flow Traders and Cars
Can any of the company-specific risk be diversified away by investing in both Flow Traders and Cars 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 Flow Traders and Cars into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flow Traders NV and Cars Inc, you can compare the effects of market volatilities on Flow Traders and Cars 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 Flow Traders with a short position of Cars. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flow Traders and Cars.
Diversification Opportunities for Flow Traders and Cars
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Flow and Cars is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Flow Traders NV and Cars Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cars Inc and Flow Traders 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 Flow Traders NV are associated (or correlated) with Cars. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cars Inc has no effect on the direction of Flow Traders i.e., Flow Traders and Cars go up and down completely randomly.
Pair Corralation between Flow Traders and Cars
Assuming the 90 days trading horizon Flow Traders NV is expected to generate 0.75 times more return on investment than Cars. However, Flow Traders NV is 1.33 times less risky than Cars. It trades about 0.25 of its potential returns per unit of risk. Cars Inc is currently generating about -0.36 per unit of risk. If you would invest 2,114 in Flow Traders NV on October 10, 2024 and sell it today you would earn a total of 199.00 from holding Flow Traders NV or generate 9.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 60.0% |
| Values | Daily Returns |
Flow Traders NV vs. Cars Inc
Performance |
| Timeline |
| Flow Traders NV |
| Cars Inc |
Flow Traders and Cars Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flow Traders and Cars
The main advantage of trading using opposite Flow Traders and Cars positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flow Traders position performs unexpectedly, Cars 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 Cars will offset losses from the drop in Cars' long position.| Flow Traders vs. EJF Investments | Flow Traders vs. Charter Communications Cl | Flow Traders vs. Tatton Asset Management | Flow Traders vs. Batm Advanced Communications |
| Cars vs. Alfa Financial Software | Cars vs. Axway Software SA | Cars vs. Delta Air Lines | Cars vs. Games Workshop 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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