Correlation Between Auto Trader and Mineral Financial
Can any of the company-specific risk be diversified away by investing in both Auto Trader and Mineral Financial 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 Mineral Financial 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 Mineral Financial Investments, you can compare the effects of market volatilities on Auto Trader and Mineral Financial 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 Mineral Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auto Trader and Mineral Financial.
Diversification Opportunities for Auto Trader and Mineral Financial
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Auto and Mineral is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Auto Trader Group and Mineral Financial Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mineral Financial 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 Mineral Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mineral Financial has no effect on the direction of Auto Trader i.e., Auto Trader and Mineral Financial go up and down completely randomly.
Pair Corralation between Auto Trader and Mineral Financial
Assuming the 90 days trading horizon Auto Trader Group is expected to under-perform the Mineral Financial. But the stock apears to be less risky and, when comparing its historical volatility, Auto Trader Group is 2.35 times less risky than Mineral Financial. The stock trades about -0.01 of its potential returns per unit of risk. The Mineral Financial Investments is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 1,325 in Mineral Financial Investments on November 4, 2024 and sell it today you would earn a total of 150.00 from holding Mineral Financial Investments or generate 11.32% 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. Mineral Financial Investments
Performance |
| Timeline |
| Auto Trader Group |
| Mineral Financial |
Auto Trader and Mineral Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Auto Trader and Mineral Financial
The main advantage of trading using opposite Auto Trader and Mineral Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Auto Trader position performs unexpectedly, Mineral Financial 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 Mineral Financial will offset losses from the drop in Mineral Financial's long position.| Auto Trader vs. Vienna Insurance Group | Auto Trader vs. Lowland Investment Co | Auto Trader vs. Vietnam Enterprise Investments | Auto Trader vs. EJF Investments |
| Mineral Financial vs. Scottish American Investment | Mineral Financial vs. Smithson Investment Trust | Mineral Financial vs. JPMorgan Japanese Investment | Mineral Financial vs. Chrysalis Investments |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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