Correlation Between Auto Trader and UNIQA Insurance
Can any of the company-specific risk be diversified away by investing in both Auto Trader and UNIQA Insurance 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 UNIQA Insurance 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 UNIQA Insurance Group, you can compare the effects of market volatilities on Auto Trader and UNIQA Insurance 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 UNIQA Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auto Trader and UNIQA Insurance.
Diversification Opportunities for Auto Trader and UNIQA Insurance
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Auto and UNIQA is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Auto Trader Group and UNIQA Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNIQA Insurance Group 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 UNIQA Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNIQA Insurance Group has no effect on the direction of Auto Trader i.e., Auto Trader and UNIQA Insurance go up and down completely randomly.
Pair Corralation between Auto Trader and UNIQA Insurance
Assuming the 90 days trading horizon Auto Trader Group is expected to generate 1.82 times more return on investment than UNIQA Insurance. However, Auto Trader is 1.82 times more volatile than UNIQA Insurance Group. It trades about 0.06 of its potential returns per unit of risk. UNIQA Insurance Group is currently generating about 0.05 per unit of risk. If you would invest 53,551 in Auto Trader Group on September 28, 2024 and sell it today you would earn a total of 25,589 from holding Auto Trader Group or generate 47.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.6% |
| Values | Daily Returns |
Auto Trader Group vs. UNIQA Insurance Group
Performance |
| Timeline |
| Auto Trader Group |
| UNIQA Insurance Group |
Auto Trader and UNIQA Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Auto Trader and UNIQA Insurance
The main advantage of trading using opposite Auto Trader and UNIQA Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Auto Trader position performs unexpectedly, UNIQA Insurance 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 UNIQA Insurance will offset losses from the drop in UNIQA Insurance's long position.| Auto Trader vs. Deltex Medical Group | Auto Trader vs. Jacquet Metal Service | Auto Trader vs. Empire Metals Limited | Auto Trader vs. Gaztransport et Technigaz |
| UNIQA Insurance vs. Nordic Semiconductor ASA | UNIQA Insurance vs. Taiwan Semiconductor Manufacturing | UNIQA Insurance vs. Auto Trader Group | UNIQA Insurance vs. Albion Technology General |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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