Correlation Between Auto Trader and CT Global
Can any of the company-specific risk be diversified away by investing in both Auto Trader and CT Global 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 CT Global 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 CT Global Managed, you can compare the effects of market volatilities on Auto Trader and CT Global 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 CT Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auto Trader and CT Global.
Diversification Opportunities for Auto Trader and CT Global
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Auto and CMPG is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Auto Trader Group and CT Global Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CT Global Managed 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 CT Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CT Global Managed has no effect on the direction of Auto Trader i.e., Auto Trader and CT Global go up and down completely randomly.
Pair Corralation between Auto Trader and CT Global
Assuming the 90 days trading horizon Auto Trader is expected to generate 1.04 times less return on investment than CT Global. In addition to that, Auto Trader is 4.21 times more volatile than CT Global Managed. It trades about 0.03 of its total potential returns per unit of risk. CT Global Managed is currently generating about 0.15 per unit of volatility. If you would invest 23,600 in CT Global Managed on November 3, 2024 and sell it today you would earn a total of 3,100 from holding CT Global Managed or generate 13.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Auto Trader Group vs. CT Global Managed
Performance |
| Timeline |
| Auto Trader Group |
| CT Global Managed |
Auto Trader and CT Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Auto Trader and CT Global
The main advantage of trading using opposite Auto Trader and CT Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Auto Trader position performs unexpectedly, CT Global 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 CT Global will offset losses from the drop in CT Global's long position.| Auto Trader vs. Cairo Communication SpA | Auto Trader vs. Spirent Communications plc | Auto Trader vs. Melia Hotels | Auto Trader vs. Mobile Tornado Group |
| CT Global vs. Spotify Technology SA | CT Global vs. DXC Technology Co | CT Global vs. Hochschild Mining plc | CT Global vs. Take Two Interactive Software |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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