Correlation Between Auto Trader and Yokohama Rubber
Can any of the company-specific risk be diversified away by investing in both Auto Trader and Yokohama Rubber 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 Yokohama Rubber 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 The Yokohama Rubber, you can compare the effects of market volatilities on Auto Trader and Yokohama Rubber 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 Yokohama Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auto Trader and Yokohama Rubber.
Diversification Opportunities for Auto Trader and Yokohama Rubber
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Auto and Yokohama is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Auto Trader Group and The Yokohama Rubber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yokohama Rubber 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 Yokohama Rubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yokohama Rubber has no effect on the direction of Auto Trader i.e., Auto Trader and Yokohama Rubber go up and down completely randomly.
Pair Corralation between Auto Trader and Yokohama Rubber
Assuming the 90 days trading horizon Auto Trader Group is expected to under-perform the Yokohama Rubber. In addition to that, Auto Trader is 1.05 times more volatile than The Yokohama Rubber. It trades about -0.07 of its total potential returns per unit of risk. The Yokohama Rubber is currently generating about -0.04 per unit of volatility. If you would invest 2,040 in The Yokohama Rubber on October 25, 2024 and sell it today you would lose (20.00) from holding The Yokohama Rubber or give up 0.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Auto Trader Group vs. The Yokohama Rubber
Performance |
| Timeline |
| Auto Trader Group |
| Yokohama Rubber |
Auto Trader and Yokohama Rubber Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Auto Trader and Yokohama Rubber
The main advantage of trading using opposite Auto Trader and Yokohama Rubber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Auto Trader position performs unexpectedly, Yokohama Rubber 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 Yokohama Rubber will offset losses from the drop in Yokohama Rubber's long position.| Auto Trader vs. NAKED WINES PLC | Auto Trader vs. Agilent Technologies | Auto Trader vs. CLEAN ENERGY FUELS | Auto Trader vs. Firan Technology Group |
| Yokohama Rubber vs. Allegheny Technologies Incorporated | Yokohama Rubber vs. Micron Technology | Yokohama Rubber vs. COMPUTERSHARE | Yokohama Rubber vs. BioNTech SE |
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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