Correlation Between Bloomsbury Publishing and Auto Trader
Can any of the company-specific risk be diversified away by investing in both Bloomsbury Publishing and Auto Trader 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 Bloomsbury Publishing and Auto Trader into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bloomsbury Publishing Plc and Auto Trader Group, you can compare the effects of market volatilities on Bloomsbury Publishing and Auto Trader 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 Bloomsbury Publishing with a short position of Auto Trader. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bloomsbury Publishing and Auto Trader.
Diversification Opportunities for Bloomsbury Publishing and Auto Trader
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Bloomsbury and Auto is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Bloomsbury Publishing Plc and Auto Trader Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auto Trader Group and Bloomsbury Publishing 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 Bloomsbury Publishing Plc are associated (or correlated) with Auto Trader. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auto Trader Group has no effect on the direction of Bloomsbury Publishing i.e., Bloomsbury Publishing and Auto Trader go up and down completely randomly.
Pair Corralation between Bloomsbury Publishing and Auto Trader
Assuming the 90 days trading horizon Bloomsbury Publishing Plc is expected to generate 1.38 times more return on investment than Auto Trader. However, Bloomsbury Publishing is 1.38 times more volatile than Auto Trader Group. It trades about 0.06 of its potential returns per unit of risk. Auto Trader Group is currently generating about 0.04 per unit of risk. If you would invest 42,055 in Bloomsbury Publishing Plc on October 26, 2024 and sell it today you would earn a total of 25,145 from holding Bloomsbury Publishing Plc or generate 59.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bloomsbury Publishing Plc vs. Auto Trader Group
Performance |
| Timeline |
| Bloomsbury Publishing Plc |
| Auto Trader Group |
Bloomsbury Publishing and Auto Trader Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bloomsbury Publishing and Auto Trader
The main advantage of trading using opposite Bloomsbury Publishing and Auto Trader positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bloomsbury Publishing position performs unexpectedly, Auto Trader 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 Auto Trader will offset losses from the drop in Auto Trader's long position.| Bloomsbury Publishing vs. Compal Electronics GDR | Bloomsbury Publishing vs. Southwest Airlines Co | Bloomsbury Publishing vs. First Class Metals | Bloomsbury Publishing vs. URU Metals |
| Auto Trader vs. Samsung Electronics Co | Auto Trader vs. Samsung Electronics Co | Auto Trader vs. Toyota Motor Corp | Auto Trader vs. SoftBank Group 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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