Correlation Between Auto Trader and Arena Group
Can any of the company-specific risk be diversified away by investing in both Auto Trader and Arena Group 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 Auto Trader and Arena Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Auto Trader Group and Arena Group Holdings, you can compare the effects of market volatilities on Auto Trader and Arena Group 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 Auto Trader with a short position of Arena Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auto Trader and Arena Group.
Diversification Opportunities for Auto Trader and Arena Group
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Auto and Arena is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Auto Trader Group and Arena Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arena Group Holdings and Auto Trader 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 Auto Trader Group are associated (or correlated) with Arena Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arena Group Holdings has no effect on the direction of Auto Trader i.e., Auto Trader and Arena Group go up and down completely randomly.
Pair Corralation between Auto Trader and Arena Group
Assuming the 90 days horizon Auto Trader Group is expected to under-perform the Arena Group. But the pink sheet apears to be less risky and, when comparing its historical volatility, Auto Trader Group is 19.12 times less risky than Arena Group. The pink sheet trades about -0.22 of its potential returns per unit of risk. The Arena Group Holdings is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 70.00 in Arena Group Holdings on October 25, 2024 and sell it today you would earn a total of 66.00 from holding Arena Group Holdings or generate 94.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.33% |
| Values | Daily Returns |
Auto Trader Group vs. Arena Group Holdings
Performance |
| Timeline |
| Auto Trader Group |
| Arena Group Holdings |
Auto Trader and Arena Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Auto Trader and Arena Group
The main advantage of trading using opposite Auto Trader and Arena Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Auto Trader position performs unexpectedly, Arena Group 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 Arena Group will offset losses from the drop in Arena Group's long position.| Auto Trader vs. Tinybeans Group Limited | Auto Trader vs. DGTL Holdings | Auto Trader vs. Sabio Holdings | Auto Trader vs. Zoomd Technologies |
| Arena Group vs. Cerberus Cyber Sentinel | Arena Group vs. Alta Equipment Group | Arena Group vs. AN2 Therapeutics | Arena Group vs. KORE Group Holdings |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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