Correlation Between Auto Trader and Ecofin Global
Can any of the company-specific risk be diversified away by investing in both Auto Trader and Ecofin 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 Ecofin 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 Ecofin Global Utilities, you can compare the effects of market volatilities on Auto Trader and Ecofin 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 Ecofin Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auto Trader and Ecofin Global.
Diversification Opportunities for Auto Trader and Ecofin Global
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Auto and Ecofin is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Auto Trader Group and Ecofin Global Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecofin Global Utilities 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 Ecofin Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecofin Global Utilities has no effect on the direction of Auto Trader i.e., Auto Trader and Ecofin Global go up and down completely randomly.
Pair Corralation between Auto Trader and Ecofin Global
Assuming the 90 days trading horizon Auto Trader Group is expected to generate 0.8 times more return on investment than Ecofin Global. However, Auto Trader Group is 1.25 times less risky than Ecofin Global. It trades about 0.22 of its potential returns per unit of risk. Ecofin Global Utilities is currently generating about 0.06 per unit of risk. If you would invest 78,940 in Auto Trader Group on September 12, 2024 and sell it today you would earn a total of 3,500 from holding Auto Trader Group or generate 4.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Auto Trader Group vs. Ecofin Global Utilities
Performance |
| Timeline |
| Auto Trader Group |
| Ecofin Global Utilities |
Auto Trader and Ecofin Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Auto Trader and Ecofin Global
The main advantage of trading using opposite Auto Trader and Ecofin Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Auto Trader position performs unexpectedly, Ecofin 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 Ecofin Global will offset losses from the drop in Ecofin Global's long position.| Auto Trader vs. Catalyst Media Group | Auto Trader vs. CATLIN GROUP | Auto Trader vs. Tamburi Investment Partners | Auto Trader vs. Magnora ASA |
| Ecofin Global vs. Samsung Electronics Co | Ecofin Global vs. Samsung Electronics Co | Ecofin Global vs. Hyundai Motor | Ecofin Global vs. Toyota Motor Corp |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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