Correlation Between Broadwind and Carsales
Can any of the company-specific risk be diversified away by investing in both Broadwind 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 Broadwind and Carsales into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Broadwind and Carsales, you can compare the effects of market volatilities on Broadwind 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 Broadwind with a short position of Carsales. Check out your portfolio center. Please also check ongoing floating volatility patterns of Broadwind and Carsales.
Diversification Opportunities for Broadwind and Carsales
Excellent diversification
The 3 months correlation between Broadwind and Carsales is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Broadwind and Carsales in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carsales and Broadwind 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 Broadwind 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 Carsales has no effect on the direction of Broadwind i.e., Broadwind and Carsales go up and down completely randomly.
Pair Corralation between Broadwind and Carsales
Assuming the 90 days trading horizon Broadwind is expected to under-perform the Carsales. In addition to that, Broadwind is 2.08 times more volatile than Carsales. It trades about -0.05 of its total potential returns per unit of risk. Carsales is currently generating about 0.11 per unit of volatility. If you would invest 2,240 in Carsales on October 25, 2024 and sell it today you would earn a total of 100.00 from holding Carsales or generate 4.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Broadwind vs. Carsales
Performance |
| Timeline |
| Broadwind |
| Carsales |
Broadwind and Carsales Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Broadwind and Carsales
The main advantage of trading using opposite Broadwind and Carsales positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Broadwind 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.| Broadwind vs. Siemens Aktiengesellschaft | Broadwind vs. Siemens Aktiengesellschaft | Broadwind vs. Schneider Electric SE | Broadwind vs. Atlas Copco A |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
Other Complementary Tools
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities |