Correlation Between Auto Trader and One Media
Can any of the company-specific risk be diversified away by investing in both Auto Trader and One Media 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 One Media 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 One Media iP, you can compare the effects of market volatilities on Auto Trader and One Media 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 One Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auto Trader and One Media.
Diversification Opportunities for Auto Trader and One Media
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Auto and One is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Auto Trader Group and One Media iP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on One Media iP 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 One Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of One Media iP has no effect on the direction of Auto Trader i.e., Auto Trader and One Media go up and down completely randomly.
Pair Corralation between Auto Trader and One Media
Assuming the 90 days trading horizon Auto Trader Group is expected to under-perform the One Media. But the stock apears to be less risky and, when comparing its historical volatility, Auto Trader Group is 3.74 times less risky than One Media. The stock trades about -0.36 of its potential returns per unit of risk. The One Media iP is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 420.00 in One Media iP on October 11, 2024 and sell it today you would earn a total of 5.00 from holding One Media iP or generate 1.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Auto Trader Group vs. One Media iP
Performance |
| Timeline |
| Auto Trader Group |
| One Media iP |
Auto Trader and One Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Auto Trader and One Media
The main advantage of trading using opposite Auto Trader and One Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Auto Trader position performs unexpectedly, One Media 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 One Media will offset losses from the drop in One Media's long position.| Auto Trader vs. Monster Beverage Corp | Auto Trader vs. Premier Foods PLC | Auto Trader vs. Dentsply Sirona | Auto Trader vs. Bloomsbury Publishing Plc |
| One Media vs. Vitec Software Group | One Media vs. Auto Trader Group | One Media vs. JB Hunt Transport | One Media vs. Various Eateries 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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