Correlation Between Auto Trader and Iron Mountain
Can any of the company-specific risk be diversified away by investing in both Auto Trader and Iron Mountain 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 Iron Mountain 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 Iron Mountain, you can compare the effects of market volatilities on Auto Trader and Iron Mountain 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 Iron Mountain. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auto Trader and Iron Mountain.
Diversification Opportunities for Auto Trader and Iron Mountain
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Auto and Iron is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Auto Trader Group and Iron Mountain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iron Mountain 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 Iron Mountain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iron Mountain has no effect on the direction of Auto Trader i.e., Auto Trader and Iron Mountain go up and down completely randomly.
Pair Corralation between Auto Trader and Iron Mountain
Assuming the 90 days trading horizon Auto Trader Group is expected to generate 0.46 times more return on investment than Iron Mountain. However, Auto Trader Group is 2.15 times less risky than Iron Mountain. It trades about -0.22 of its potential returns per unit of risk. Iron Mountain is currently generating about -0.16 per unit of risk. If you would invest 81,140 in Auto Trader Group on October 17, 2024 and sell it today you would lose (3,060) from holding Auto Trader Group or give up 3.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.24% |
| Values | Daily Returns |
Auto Trader Group vs. Iron Mountain
Performance |
| Timeline |
| Auto Trader Group |
| Iron Mountain |
Auto Trader and Iron Mountain Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Auto Trader and Iron Mountain
The main advantage of trading using opposite Auto Trader and Iron Mountain positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Auto Trader position performs unexpectedly, Iron Mountain 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 Iron Mountain will offset losses from the drop in Iron Mountain's long position.| Auto Trader vs. Flow Traders NV | Auto Trader vs. Albion Technology General | Auto Trader vs. Vitec Software Group | Auto Trader vs. Allianz Technology Trust |
| Iron Mountain vs. Eco Animal Health | Iron Mountain vs. MyHealthChecked Plc | Iron Mountain vs. Auto Trader Group | Iron Mountain vs. Primary Health Properties |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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