Correlation Between Autoliv and Barnes Noble
Can any of the company-specific risk be diversified away by investing in both Autoliv and Barnes Noble 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 Autoliv and Barnes Noble into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Autoliv and Barnes Noble Education, you can compare the effects of market volatilities on Autoliv and Barnes Noble 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 Autoliv with a short position of Barnes Noble. Check out your portfolio center. Please also check ongoing floating volatility patterns of Autoliv and Barnes Noble.
Diversification Opportunities for Autoliv and Barnes Noble
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Autoliv and Barnes is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Autoliv and Barnes Noble Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barnes Noble Education and Autoliv 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 Autoliv are associated (or correlated) with Barnes Noble. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barnes Noble Education has no effect on the direction of Autoliv i.e., Autoliv and Barnes Noble go up and down completely randomly.
Pair Corralation between Autoliv and Barnes Noble
Considering the 90-day investment horizon Autoliv is expected to generate 4.19 times less return on investment than Barnes Noble. But when comparing it to its historical volatility, Autoliv is 3.81 times less risky than Barnes Noble. It trades about 0.1 of its potential returns per unit of risk. Barnes Noble Education is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 969.00 in Barnes Noble Education on August 31, 2024 and sell it today you would earn a total of 131.00 from holding Barnes Noble Education or generate 13.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Autoliv vs. Barnes Noble Education
Performance |
| Timeline |
| Autoliv |
| Barnes Noble Education |
Autoliv and Barnes Noble Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Autoliv and Barnes Noble
The main advantage of trading using opposite Autoliv and Barnes Noble positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Autoliv position performs unexpectedly, Barnes Noble 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 Barnes Noble will offset losses from the drop in Barnes Noble's long position.The idea behind Autoliv and Barnes Noble Education pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Barnes Noble vs. Sportsmans | Barnes Noble vs. MarineMax | Barnes Noble vs. Build A Bear Workshop | Barnes Noble vs. Leslies |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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