Correlation Between Motorcar Parts and Citizens Financial
Can any of the company-specific risk be diversified away by investing in both Motorcar Parts and Citizens Financial 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 Motorcar Parts and Citizens Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Motorcar Parts of and Citizens Financial Group, you can compare the effects of market volatilities on Motorcar Parts and Citizens Financial 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 Motorcar Parts with a short position of Citizens Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Motorcar Parts and Citizens Financial.
Diversification Opportunities for Motorcar Parts and Citizens Financial
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Motorcar and Citizens is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Motorcar Parts of and Citizens Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizens Financial and Motorcar Parts 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 Motorcar Parts of are associated (or correlated) with Citizens Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citizens Financial has no effect on the direction of Motorcar Parts i.e., Motorcar Parts and Citizens Financial go up and down completely randomly.
Pair Corralation between Motorcar Parts and Citizens Financial
Assuming the 90 days horizon Motorcar Parts of is expected to generate 1.62 times more return on investment than Citizens Financial. However, Motorcar Parts is 1.62 times more volatile than Citizens Financial Group. It trades about 0.32 of its potential returns per unit of risk. Citizens Financial Group is currently generating about 0.37 per unit of risk. If you would invest 510.00 in Motorcar Parts of on August 29, 2024 and sell it today you would earn a total of 155.00 from holding Motorcar Parts of or generate 30.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Motorcar Parts of vs. Citizens Financial Group
Performance |
| Timeline |
| Motorcar Parts |
| Citizens Financial |
Motorcar Parts and Citizens Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Motorcar Parts and Citizens Financial
The main advantage of trading using opposite Motorcar Parts and Citizens Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Motorcar Parts position performs unexpectedly, Citizens Financial 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 Citizens Financial will offset losses from the drop in Citizens Financial's long position.The idea behind Motorcar Parts of and Citizens Financial Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Citizens Financial vs. Cars Inc | Citizens Financial vs. Motorcar Parts of | Citizens Financial vs. REINET INVESTMENTS SCA | Citizens Financial vs. PennyMac Mortgage Investment |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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