Correlation Between Auto Trader and FLOW TRADERS
Can any of the company-specific risk be diversified away by investing in both Auto Trader and FLOW TRADERS 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 FLOW TRADERS 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 FLOW TRADERS LTD, you can compare the effects of market volatilities on Auto Trader and FLOW TRADERS 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 FLOW TRADERS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auto Trader and FLOW TRADERS.
Diversification Opportunities for Auto Trader and FLOW TRADERS
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Auto and FLOW is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Auto Trader Group and FLOW TRADERS LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FLOW TRADERS LTD 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 FLOW TRADERS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FLOW TRADERS LTD has no effect on the direction of Auto Trader i.e., Auto Trader and FLOW TRADERS go up and down completely randomly.
Pair Corralation between Auto Trader and FLOW TRADERS
Assuming the 90 days trading horizon Auto Trader Group is expected to under-perform the FLOW TRADERS. In addition to that, Auto Trader is 1.58 times more volatile than FLOW TRADERS LTD. It trades about -0.03 of its total potential returns per unit of risk. FLOW TRADERS LTD is currently generating about 0.02 per unit of volatility. If you would invest 2,100 in FLOW TRADERS LTD on September 1, 2024 and sell it today you would earn a total of 8.00 from holding FLOW TRADERS LTD or generate 0.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Auto Trader Group vs. FLOW TRADERS LTD
Performance |
| Timeline |
| Auto Trader Group |
| FLOW TRADERS LTD |
Auto Trader and FLOW TRADERS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Auto Trader and FLOW TRADERS
The main advantage of trading using opposite Auto Trader and FLOW TRADERS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Auto Trader position performs unexpectedly, FLOW TRADERS 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 FLOW TRADERS will offset losses from the drop in FLOW TRADERS's long position.| Auto Trader vs. FORMPIPE SOFTWARE AB | Auto Trader vs. UNITED UTILITIES GR | Auto Trader vs. COPLAND ROAD CAPITAL | Auto Trader vs. Algonquin Power Utilities |
| FLOW TRADERS vs. Morgan Stanley | FLOW TRADERS vs. The Goldman Sachs | FLOW TRADERS vs. Superior Plus Corp | FLOW TRADERS vs. NMI Holdings |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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