Correlation Between Prosus NV and CarGurus
Can any of the company-specific risk be diversified away by investing in both Prosus NV and CarGurus 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 Prosus NV and CarGurus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prosus NV and CarGurus, you can compare the effects of market volatilities on Prosus NV and CarGurus 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 Prosus NV with a short position of CarGurus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prosus NV and CarGurus.
Diversification Opportunities for Prosus NV and CarGurus
Very weak diversification
The 3 months correlation between Prosus and CarGurus is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Prosus NV and CarGurus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CarGurus and Prosus NV 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 Prosus NV are associated (or correlated) with CarGurus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CarGurus has no effect on the direction of Prosus NV i.e., Prosus NV and CarGurus go up and down completely randomly.
Pair Corralation between Prosus NV and CarGurus
Assuming the 90 days horizon Prosus NV is expected to generate 3.23 times less return on investment than CarGurus. But when comparing it to its historical volatility, Prosus NV is 1.27 times less risky than CarGurus. It trades about 0.04 of its potential returns per unit of risk. CarGurus is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,205 in CarGurus on September 2, 2024 and sell it today you would earn a total of 2,355 from holding CarGurus or generate 195.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prosus NV vs. CarGurus
Performance |
| Timeline |
| Prosus NV |
| CarGurus |
Prosus NV and CarGurus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prosus NV and CarGurus
The main advantage of trading using opposite Prosus NV and CarGurus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prosus NV position performs unexpectedly, CarGurus 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 CarGurus will offset losses from the drop in CarGurus' long position.| Prosus NV vs. SPORT LISBOA E | Prosus NV vs. Gaztransport Technigaz SA | Prosus NV vs. Big 5 Sporting | Prosus NV vs. USWE SPORTS AB |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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