Correlation Between LIFENET INSURANCE and Carsales
Can any of the company-specific risk be diversified away by investing in both LIFENET INSURANCE and Carsales 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 LIFENET INSURANCE and Carsales into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LIFENET INSURANCE CO and CarsalesCom, you can compare the effects of market volatilities on LIFENET INSURANCE and Carsales 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 LIFENET INSURANCE with a short position of Carsales. Check out your portfolio center. Please also check ongoing floating volatility patterns of LIFENET INSURANCE and Carsales.
Diversification Opportunities for LIFENET INSURANCE and Carsales
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between LIFENET and Carsales is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding LIFENET INSURANCE CO and CarsalesCom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CarsalesCom and LIFENET INSURANCE 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 LIFENET INSURANCE CO are associated (or correlated) with Carsales. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CarsalesCom has no effect on the direction of LIFENET INSURANCE i.e., LIFENET INSURANCE and Carsales go up and down completely randomly.
Pair Corralation between LIFENET INSURANCE and Carsales
Assuming the 90 days horizon LIFENET INSURANCE is expected to generate 1.26 times less return on investment than Carsales. In addition to that, LIFENET INSURANCE is 1.27 times more volatile than CarsalesCom. It trades about 0.24 of its total potential returns per unit of risk. CarsalesCom is currently generating about 0.38 per unit of volatility. If you would invest 2,220 in CarsalesCom on August 25, 2024 and sell it today you would earn a total of 260.00 from holding CarsalesCom or generate 11.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LIFENET INSURANCE CO vs. CarsalesCom
Performance |
| Timeline |
| LIFENET INSURANCE |
| CarsalesCom |
LIFENET INSURANCE and Carsales Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LIFENET INSURANCE and Carsales
The main advantage of trading using opposite LIFENET INSURANCE and Carsales positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LIFENET INSURANCE position performs unexpectedly, Carsales 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 Carsales will offset losses from the drop in Carsales' long position.| LIFENET INSURANCE vs. Lyxor 1 | LIFENET INSURANCE vs. Xtrackers ShortDAX | LIFENET INSURANCE vs. Xtrackers LevDAX |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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