Correlation Between Auto Trader and LEROY SEAFOOD
Can any of the company-specific risk be diversified away by investing in both Auto Trader and LEROY SEAFOOD 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 LEROY SEAFOOD 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 LEROY SEAFOOD GRUNSPADR, you can compare the effects of market volatilities on Auto Trader and LEROY SEAFOOD 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 LEROY SEAFOOD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auto Trader and LEROY SEAFOOD.
Diversification Opportunities for Auto Trader and LEROY SEAFOOD
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Auto and LEROY is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Auto Trader Group and LEROY SEAFOOD GRUNSPADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LEROY SEAFOOD GRUNSPADR 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 LEROY SEAFOOD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LEROY SEAFOOD GRUNSPADR has no effect on the direction of Auto Trader i.e., Auto Trader and LEROY SEAFOOD go up and down completely randomly.
Pair Corralation between Auto Trader and LEROY SEAFOOD
Assuming the 90 days trading horizon Auto Trader Group is expected to under-perform the LEROY SEAFOOD. But the stock apears to be less risky and, when comparing its historical volatility, Auto Trader Group is 1.06 times less risky than LEROY SEAFOOD. The stock trades about -0.07 of its potential returns per unit of risk. The LEROY SEAFOOD GRUNSPADR is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 780.00 in LEROY SEAFOOD GRUNSPADR on October 25, 2024 and sell it today you would earn a total of 65.00 from holding LEROY SEAFOOD GRUNSPADR or generate 8.33% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Auto Trader Group vs. LEROY SEAFOOD GRUNSPADR
Performance |
Timeline |
Auto Trader Group |
LEROY SEAFOOD GRUNSPADR |
Auto Trader and LEROY SEAFOOD Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Auto Trader and LEROY SEAFOOD
The main advantage of trading using opposite Auto Trader and LEROY SEAFOOD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Auto Trader position performs unexpectedly, LEROY SEAFOOD 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 LEROY SEAFOOD will offset losses from the drop in LEROY SEAFOOD'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 |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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