Correlation Between Bread Financial and Autohome
Can any of the company-specific risk be diversified away by investing in both Bread Financial and Autohome 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 Bread Financial and Autohome into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bread Financial Holdings and Autohome, you can compare the effects of market volatilities on Bread Financial and Autohome 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 Bread Financial with a short position of Autohome. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bread Financial and Autohome.
Diversification Opportunities for Bread Financial and Autohome
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bread and Autohome is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Bread Financial Holdings and Autohome in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autohome and Bread Financial 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 Bread Financial Holdings are associated (or correlated) with Autohome. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Autohome has no effect on the direction of Bread Financial i.e., Bread Financial and Autohome go up and down completely randomly.
Pair Corralation between Bread Financial and Autohome
Assuming the 90 days trading horizon Bread Financial Holdings is expected to generate 3.45 times more return on investment than Autohome. However, Bread Financial is 3.45 times more volatile than Autohome. It trades about 0.22 of its potential returns per unit of risk. Autohome is currently generating about -0.01 per unit of risk. If you would invest 7,347 in Bread Financial Holdings on September 2, 2024 and sell it today you would earn a total of 1,539 from holding Bread Financial Holdings or generate 20.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bread Financial Holdings vs. Autohome
Performance |
| Timeline |
| Bread Financial Holdings |
| Autohome |
Bread Financial and Autohome Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bread Financial and Autohome
The main advantage of trading using opposite Bread Financial and Autohome positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bread Financial position performs unexpectedly, Autohome 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 Autohome will offset losses from the drop in Autohome's long position.| Bread Financial vs. Multilaser Industrial SA | Bread Financial vs. Technos SA | Bread Financial vs. Uber Technologies | Bread Financial vs. Take Two Interactive Software |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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