Correlation Between Automotive Finco and Dream Industrial
Can any of the company-specific risk be diversified away by investing in both Automotive Finco and Dream Industrial 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 Automotive Finco and Dream Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Automotive Finco Corp and Dream Industrial Real, you can compare the effects of market volatilities on Automotive Finco and Dream Industrial 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 Automotive Finco with a short position of Dream Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automotive Finco and Dream Industrial.
Diversification Opportunities for Automotive Finco and Dream Industrial
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Automotive and Dream is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Automotive Finco Corp and Dream Industrial Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dream Industrial Real and Automotive Finco 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 Automotive Finco Corp are associated (or correlated) with Dream Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dream Industrial Real has no effect on the direction of Automotive Finco i.e., Automotive Finco and Dream Industrial go up and down completely randomly.
Pair Corralation between Automotive Finco and Dream Industrial
Assuming the 90 days trading horizon Automotive Finco Corp is expected to generate 2.53 times more return on investment than Dream Industrial. However, Automotive Finco is 2.53 times more volatile than Dream Industrial Real. It trades about 0.01 of its potential returns per unit of risk. Dream Industrial Real is currently generating about -0.29 per unit of risk. If you would invest 86.00 in Automotive Finco Corp on September 13, 2024 and sell it today you would earn a total of 0.00 from holding Automotive Finco Corp or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Automotive Finco Corp vs. Dream Industrial Real
Performance |
| Timeline |
| Automotive Finco Corp |
| Dream Industrial Real |
Automotive Finco and Dream Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Automotive Finco and Dream Industrial
The main advantage of trading using opposite Automotive Finco and Dream Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automotive Finco position performs unexpectedly, Dream Industrial 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 Dream Industrial will offset losses from the drop in Dream Industrial's long position.| Automotive Finco vs. Xtract One Technologies | Automotive Finco vs. Canlan Ice Sports | Automotive Finco vs. Wishpond Technologies | Automotive Finco vs. TGS Esports |
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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