Correlation Between AUTO TRADER and Virtus Investment
Can any of the company-specific risk be diversified away by investing in both AUTO TRADER and Virtus Investment 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 Virtus Investment 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 Virtus Investment Partners, you can compare the effects of market volatilities on AUTO TRADER and Virtus Investment 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 Virtus Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of AUTO TRADER and Virtus Investment.
Diversification Opportunities for AUTO TRADER and Virtus Investment
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between AUTO and Virtus is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding AUTO TRADER ADR and Virtus Investment Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Investment 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 Virtus Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Investment has no effect on the direction of AUTO TRADER i.e., AUTO TRADER and Virtus Investment go up and down completely randomly.
Pair Corralation between AUTO TRADER and Virtus Investment
Assuming the 90 days trading horizon AUTO TRADER is expected to generate 1.36 times less return on investment than Virtus Investment. But when comparing it to its historical volatility, AUTO TRADER ADR is 1.1 times less risky than Virtus Investment. It trades about 0.06 of its potential returns per unit of risk. Virtus Investment Partners is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 14,254 in Virtus Investment Partners on August 31, 2024 and sell it today you would earn a total of 9,346 from holding Virtus Investment Partners or generate 65.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AUTO TRADER ADR vs. Virtus Investment Partners
Performance |
| Timeline |
| AUTO TRADER ADR |
| Virtus Investment |
AUTO TRADER and Virtus Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AUTO TRADER and Virtus Investment
The main advantage of trading using opposite AUTO TRADER and Virtus Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AUTO TRADER position performs unexpectedly, Virtus Investment 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 Virtus Investment will offset losses from the drop in Virtus Investment's long position.| AUTO TRADER vs. Alphabet Class A | AUTO TRADER vs. Alphabet Class A | AUTO TRADER vs. Meta Platforms | AUTO TRADER vs. Tencent Holdings |
| Virtus Investment vs. Ameriprise Financial | Virtus Investment vs. Ares Management Corp | Virtus Investment vs. Superior Plus Corp | Virtus Investment 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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