Correlation Between ALEFARM BREWING and AutoNation
Can any of the company-specific risk be diversified away by investing in both ALEFARM BREWING and AutoNation 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 ALEFARM BREWING and AutoNation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ALEFARM BREWING DK 05 and AutoNation, you can compare the effects of market volatilities on ALEFARM BREWING and AutoNation 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 ALEFARM BREWING with a short position of AutoNation. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALEFARM BREWING and AutoNation.
Diversification Opportunities for ALEFARM BREWING and AutoNation
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ALEFARM and AutoNation is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding ALEFARM BREWING DK 05 and AutoNation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AutoNation and ALEFARM BREWING 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 ALEFARM BREWING DK 05 are associated (or correlated) with AutoNation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AutoNation has no effect on the direction of ALEFARM BREWING i.e., ALEFARM BREWING and AutoNation go up and down completely randomly.
Pair Corralation between ALEFARM BREWING and AutoNation
Assuming the 90 days horizon ALEFARM BREWING is expected to generate 1.02 times less return on investment than AutoNation. In addition to that, ALEFARM BREWING is 3.07 times more volatile than AutoNation. It trades about 0.1 of its total potential returns per unit of risk. AutoNation is currently generating about 0.32 per unit of volatility. If you would invest 16,440 in AutoNation on October 29, 2024 and sell it today you would earn a total of 1,260 from holding AutoNation or generate 7.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ALEFARM BREWING DK 05 vs. AutoNation
Performance |
| Timeline |
| ALEFARM BREWING DK |
| AutoNation |
ALEFARM BREWING and AutoNation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ALEFARM BREWING and AutoNation
The main advantage of trading using opposite ALEFARM BREWING and AutoNation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALEFARM BREWING position performs unexpectedly, AutoNation 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 AutoNation will offset losses from the drop in AutoNation's long position.| ALEFARM BREWING vs. Khiron Life Sciences | ALEFARM BREWING vs. Motorcar Parts of | ALEFARM BREWING vs. Grupo Carso SAB | ALEFARM BREWING vs. Geely Automobile Holdings |
| AutoNation vs. PKSHA TECHNOLOGY INC | AutoNation vs. Agilent Technologies | AutoNation vs. FANDIFI TECHNOLOGY P | AutoNation vs. Firan Technology Group |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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