Correlation Between Auto Trader and AB SKF
Can any of the company-specific risk be diversified away by investing in both Auto Trader and AB SKF 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 AB SKF 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 AB SKF B, you can compare the effects of market volatilities on Auto Trader and AB SKF 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 AB SKF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auto Trader and AB SKF.
Diversification Opportunities for Auto Trader and AB SKF
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Auto and 0NWX is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Auto Trader Group and AB SKF B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AB SKF B 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 AB SKF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AB SKF B has no effect on the direction of Auto Trader i.e., Auto Trader and AB SKF go up and down completely randomly.
Pair Corralation between Auto Trader and AB SKF
Assuming the 90 days trading horizon Auto Trader Group is expected to under-perform the AB SKF. But the stock apears to be less risky and, when comparing its historical volatility, Auto Trader Group is 1.06 times less risky than AB SKF. The stock trades about -0.05 of its potential returns per unit of risk. The AB SKF B is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 20,805 in AB SKF B on August 31, 2024 and sell it today you would earn a total of 130.00 from holding AB SKF B or generate 0.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Auto Trader Group vs. AB SKF B
Performance |
| Timeline |
| Auto Trader Group |
| AB SKF B |
Auto Trader and AB SKF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Auto Trader and AB SKF
The main advantage of trading using opposite Auto Trader and AB SKF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Auto Trader position performs unexpectedly, AB SKF 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 AB SKF will offset losses from the drop in AB SKF's long position.| Auto Trader vs. Infrastrutture Wireless Italiane | Auto Trader vs. European Metals Holdings | Auto Trader vs. Gamma Communications PLC | Auto Trader vs. Empire Metals Limited |
| AB SKF vs. Monster Beverage Corp | AB SKF vs. Auto Trader Group | AB SKF vs. Verizon Communications | AB SKF vs. Anglesey Mining |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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