Correlation Between Auto Trader and IShares Dow
Can any of the company-specific risk be diversified away by investing in both Auto Trader and IShares Dow 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 IShares Dow 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 iShares Dow Jones, you can compare the effects of market volatilities on Auto Trader and IShares Dow 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 IShares Dow. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auto Trader and IShares Dow.
Diversification Opportunities for Auto Trader and IShares Dow
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Auto and IShares is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Auto Trader Group and iShares Dow Jones in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Dow Jones 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 IShares Dow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Dow Jones has no effect on the direction of Auto Trader i.e., Auto Trader and IShares Dow go up and down completely randomly.
Pair Corralation between Auto Trader and IShares Dow
Assuming the 90 days trading horizon Auto Trader Group is expected to under-perform the IShares Dow. In addition to that, Auto Trader is 1.31 times more volatile than iShares Dow Jones. It trades about -0.09 of its total potential returns per unit of risk. iShares Dow Jones is currently generating about 0.19 per unit of volatility. If you would invest 7,366 in iShares Dow Jones on October 25, 2024 and sell it today you would earn a total of 208.00 from holding iShares Dow Jones or generate 2.82% 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. iShares Dow Jones
Performance |
| Timeline |
| Auto Trader Group |
| iShares Dow Jones |
Auto Trader and IShares Dow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Auto Trader and IShares Dow
The main advantage of trading using opposite Auto Trader and IShares Dow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Auto Trader position performs unexpectedly, IShares Dow 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 IShares Dow will offset losses from the drop in IShares Dow's long position.| Auto Trader vs. Samsung Electronics Co | Auto Trader vs. Samsung Electronics Co | Auto Trader vs. Toyota Motor Corp | Auto Trader vs. Reliance Industries Ltd |
| IShares Dow vs. iShares MSCI Japan | IShares Dow vs. iShares JP Morgan | IShares Dow vs. iShares MSCI Europe | IShares Dow vs. iShares Nasdaq Biotechnology |
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 Stocks Directory module to find actively traded stocks across global markets.
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