Correlation Between AUTO TRADER and ALERION CLEANPOWER
Can any of the company-specific risk be diversified away by investing in both AUTO TRADER and ALERION CLEANPOWER 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 ALERION CLEANPOWER into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AUTO TRADER ADR and ALERION CLEANPOWER, you can compare the effects of market volatilities on AUTO TRADER and ALERION CLEANPOWER 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 ALERION CLEANPOWER. Check out your portfolio center. Please also check ongoing floating volatility patterns of AUTO TRADER and ALERION CLEANPOWER.
Diversification Opportunities for AUTO TRADER and ALERION CLEANPOWER
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between AUTO and ALERION is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding AUTO TRADER ADR and ALERION CLEANPOWER in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALERION CLEANPOWER 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 ADR are associated (or correlated) with ALERION CLEANPOWER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALERION CLEANPOWER has no effect on the direction of AUTO TRADER i.e., AUTO TRADER and ALERION CLEANPOWER go up and down completely randomly.
Pair Corralation between AUTO TRADER and ALERION CLEANPOWER
Assuming the 90 days trading horizon AUTO TRADER ADR is expected to generate 0.86 times more return on investment than ALERION CLEANPOWER. However, AUTO TRADER ADR is 1.17 times less risky than ALERION CLEANPOWER. It trades about 0.03 of its potential returns per unit of risk. ALERION CLEANPOWER is currently generating about -0.01 per unit of risk. If you would invest 231.00 in AUTO TRADER ADR on October 23, 2024 and sell it today you would earn a total of 1.00 from holding AUTO TRADER ADR or generate 0.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AUTO TRADER ADR vs. ALERION CLEANPOWER
Performance |
| Timeline |
| AUTO TRADER ADR |
| ALERION CLEANPOWER |
AUTO TRADER and ALERION CLEANPOWER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AUTO TRADER and ALERION CLEANPOWER
The main advantage of trading using opposite AUTO TRADER and ALERION CLEANPOWER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AUTO TRADER position performs unexpectedly, ALERION CLEANPOWER 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 ALERION CLEANPOWER will offset losses from the drop in ALERION CLEANPOWER's long position.| AUTO TRADER vs. Hanison Construction Holdings | AUTO TRADER vs. Australian Agricultural | AUTO TRADER vs. GRIFFIN MINING LTD | AUTO TRADER vs. Dairy Farm International |
| ALERION CLEANPOWER vs. Encavis AG | ALERION CLEANPOWER vs. CenterPoint Energy | ALERION CLEANPOWER vs. Gossan Resources | ALERION CLEANPOWER vs. CALTAGIRONE EDITORE |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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