Correlation Between Auto Trader and Thryv Holdings

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Can any of the company-specific risk be diversified away by investing in both Auto Trader and Thryv Holdings 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 Thryv Holdings 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 Thryv Holdings, you can compare the effects of market volatilities on Auto Trader and Thryv Holdings 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 Thryv Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auto Trader and Thryv Holdings.

Diversification Opportunities for Auto Trader and Thryv Holdings

0.68
  Correlation Coefficient

Poor diversification

The 3 months correlation between Auto and Thryv is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Auto Trader Group and Thryv Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thryv 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 Thryv Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thryv Holdings has no effect on the direction of Auto Trader i.e., Auto Trader and Thryv Holdings go up and down completely randomly.

Pair Corralation between Auto Trader and Thryv Holdings

Assuming the 90 days horizon Auto Trader Group is expected to under-perform the Thryv Holdings. But the pink sheet apears to be less risky and, when comparing its historical volatility, Auto Trader Group is 2.77 times less risky than Thryv Holdings. The pink sheet trades about -0.22 of its potential returns per unit of risk. The Thryv Holdings is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  1,758  in Thryv Holdings on October 25, 2024 and sell it today you would lose (119.00) from holding Thryv Holdings or give up 6.77% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy98.33%
ValuesDaily Returns

Auto Trader Group  vs.  Thryv Holdings

 Performance 
       Timeline  
Auto Trader Group 

Risk-Adjusted Performance

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Over the last 90 days Auto Trader Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
Thryv Holdings 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Thryv Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Thryv Holdings is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Auto Trader and Thryv Holdings Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Auto Trader and Thryv Holdings

The main advantage of trading using opposite Auto Trader and Thryv Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Auto Trader position performs unexpectedly, Thryv Holdings 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 Thryv Holdings will offset losses from the drop in Thryv Holdings' long position.
The idea behind Auto Trader Group and Thryv Holdings 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.
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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.

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