Correlation Between Auto Trader and MTI Wireless
Can any of the company-specific risk be diversified away by investing in both Auto Trader and MTI Wireless 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 MTI Wireless 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 MTI Wireless Edge, you can compare the effects of market volatilities on Auto Trader and MTI Wireless 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 MTI Wireless. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auto Trader and MTI Wireless.
Diversification Opportunities for Auto Trader and MTI Wireless
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Auto and MTI is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Auto Trader Group and MTI Wireless Edge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MTI Wireless Edge 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 MTI Wireless. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MTI Wireless Edge has no effect on the direction of Auto Trader i.e., Auto Trader and MTI Wireless go up and down completely randomly.
Pair Corralation between Auto Trader and MTI Wireless
Assuming the 90 days trading horizon Auto Trader Group is expected to generate 1.72 times more return on investment than MTI Wireless. However, Auto Trader is 1.72 times more volatile than MTI Wireless Edge. It trades about -0.01 of its potential returns per unit of risk. MTI Wireless Edge is currently generating about -0.14 per unit of risk. If you would invest 84,420 in Auto Trader Group on September 2, 2024 and sell it today you would lose (520.00) from holding Auto Trader Group or give up 0.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Auto Trader Group vs. MTI Wireless Edge
Performance |
| Timeline |
| Auto Trader Group |
| MTI Wireless Edge |
Auto Trader and MTI Wireless Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Auto Trader and MTI Wireless
The main advantage of trading using opposite Auto Trader and MTI Wireless positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Auto Trader position performs unexpectedly, MTI Wireless 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 MTI Wireless will offset losses from the drop in MTI Wireless' long position.| Auto Trader vs. Catalyst Media Group | Auto Trader vs. Tamburi Investment Partners | Auto Trader vs. Magnora ASA | Auto Trader vs. RTW Venture Fund |
| MTI Wireless vs. Ross Stores | MTI Wireless vs. Uber Technologies | MTI Wireless vs. Ashtead Technology Holdings | MTI Wireless vs. Playtech Plc |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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