Correlation Between Auto Trader and Globe Trade
Can any of the company-specific risk be diversified away by investing in both Auto Trader and Globe Trade 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 Auto Trader and Globe Trade into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Auto Trader Group and Globe Trade Centre, you can compare the effects of market volatilities on Auto Trader and Globe Trade 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 Auto Trader with a short position of Globe Trade. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auto Trader and Globe Trade.
Diversification Opportunities for Auto Trader and Globe Trade
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Auto and Globe is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Auto Trader Group and Globe Trade Centre in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globe Trade Centre and Auto Trader 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 Auto Trader Group are associated (or correlated) with Globe Trade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globe Trade Centre has no effect on the direction of Auto Trader i.e., Auto Trader and Globe Trade go up and down completely randomly.
Pair Corralation between Auto Trader and Globe Trade
Assuming the 90 days trading horizon Auto Trader Group is expected to under-perform the Globe Trade. In addition to that, Auto Trader is 10.01 times more volatile than Globe Trade Centre. It trades about -0.09 of its total potential returns per unit of risk. Globe Trade Centre is currently generating about -0.21 per unit of volatility. If you would invest 102.00 in Globe Trade Centre on August 29, 2024 and sell it today you would lose (1.00) from holding Globe Trade Centre or give up 0.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Auto Trader Group vs. Globe Trade Centre
Performance |
| Timeline |
| Auto Trader Group |
| Globe Trade Centre |
Auto Trader and Globe Trade Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Auto Trader and Globe Trade
The main advantage of trading using opposite Auto Trader and Globe Trade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Auto Trader position performs unexpectedly, Globe Trade 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 Globe Trade will offset losses from the drop in Globe Trade's long position.| Auto Trader vs. Apple Inc | Auto Trader vs. Apple Inc | Auto Trader vs. Apple Inc | Auto Trader vs. Apple Inc |
| Globe Trade vs. Corporate Office Properties | Globe Trade vs. TSOGO SUN GAMING | Globe Trade vs. DFS Furniture PLC | Globe Trade vs. FUTURE GAMING GRP |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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