Correlation Between Auto Trader and Sparebank
Can any of the company-specific risk be diversified away by investing in both Auto Trader and Sparebank 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 Sparebank 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 Sparebank 1 SR, you can compare the effects of market volatilities on Auto Trader and Sparebank 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 Sparebank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auto Trader and Sparebank.
Diversification Opportunities for Auto Trader and Sparebank
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Auto and Sparebank is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Auto Trader Group and Sparebank 1 SR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparebank 1 SR 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 Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparebank 1 SR has no effect on the direction of Auto Trader i.e., Auto Trader and Sparebank go up and down completely randomly.
Pair Corralation between Auto Trader and Sparebank
Assuming the 90 days trading horizon Auto Trader Group is expected to under-perform the Sparebank. But the stock apears to be less risky and, when comparing its historical volatility, Auto Trader Group is 1.02 times less risky than Sparebank. The stock trades about -0.26 of its potential returns per unit of risk. The Sparebank 1 SR is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 14,320 in Sparebank 1 SR on September 27, 2024 and sell it today you would earn a total of 120.00 from holding Sparebank 1 SR or generate 0.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Auto Trader Group vs. Sparebank 1 SR
Performance |
| Timeline |
| Auto Trader Group |
| Sparebank 1 SR |
Auto Trader and Sparebank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Auto Trader and Sparebank
The main advantage of trading using opposite Auto Trader and Sparebank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Auto Trader position performs unexpectedly, Sparebank 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 Sparebank will offset losses from the drop in Sparebank's long position.| Auto Trader vs. Hyundai Motor | Auto Trader vs. Toyota Motor Corp | Auto Trader vs. SoftBank Group Corp | Auto Trader vs. Halyk Bank of |
| Sparebank vs. Atresmedia | Sparebank vs. MediaZest plc | Sparebank vs. Auto Trader Group | Sparebank vs. Prosiebensat 1 Media |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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