Correlation Between Auction Technology and Spotify Technology
Can any of the company-specific risk be diversified away by investing in both Auction Technology and Spotify Technology 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 Auction Technology and Spotify Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Auction Technology Group and Spotify Technology SA, you can compare the effects of market volatilities on Auction Technology and Spotify Technology 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 Auction Technology with a short position of Spotify Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auction Technology and Spotify Technology.
Diversification Opportunities for Auction Technology and Spotify Technology
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Auction and Spotify is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Auction Technology Group and Spotify Technology SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spotify Technology and Auction Technology 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 Auction Technology Group are associated (or correlated) with Spotify Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spotify Technology has no effect on the direction of Auction Technology i.e., Auction Technology and Spotify Technology go up and down completely randomly.
Pair Corralation between Auction Technology and Spotify Technology
Assuming the 90 days trading horizon Auction Technology is expected to generate 10.2 times less return on investment than Spotify Technology. But when comparing it to its historical volatility, Auction Technology Group is 1.22 times less risky than Spotify Technology. It trades about 0.05 of its potential returns per unit of risk. Spotify Technology SA is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest 35,330 in Spotify Technology SA on August 25, 2024 and sell it today you would earn a total of 9,945 from holding Spotify Technology SA or generate 28.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Auction Technology Group vs. Spotify Technology SA
Performance |
| Timeline |
| Auction Technology |
| Spotify Technology |
Auction Technology and Spotify Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Auction Technology and Spotify Technology
The main advantage of trading using opposite Auction Technology and Spotify Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Auction Technology position performs unexpectedly, Spotify Technology 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 Spotify Technology will offset losses from the drop in Spotify Technology's long position.| Auction Technology vs. Samsung Electronics Co | Auction Technology vs. Samsung Electronics Co | Auction Technology vs. Hyundai Motor | Auction Technology vs. Toyota Motor Corp |
| Spotify Technology vs. Quadrise Plc | Spotify Technology vs. Intuitive Investments Group | Spotify Technology vs. European Metals Holdings | Spotify Technology vs. Athelney Trust plc |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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