Correlation Between Cars and Celsius Holdings
Can any of the company-specific risk be diversified away by investing in both Cars and Celsius Holdings 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 Cars and Celsius Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cars Inc and Celsius Holdings, you can compare the effects of market volatilities on Cars and Celsius Holdings 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 Cars with a short position of Celsius Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cars and Celsius Holdings.
Diversification Opportunities for Cars and Celsius Holdings
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cars and Celsius is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Cars Inc and Celsius Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Celsius Holdings and Cars 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 Cars Inc are associated (or correlated) with Celsius Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Celsius Holdings has no effect on the direction of Cars i.e., Cars and Celsius Holdings go up and down completely randomly.
Pair Corralation between Cars and Celsius Holdings
Given the investment horizon of 90 days Cars is expected to generate 1.25 times less return on investment than Celsius Holdings. But when comparing it to its historical volatility, Cars Inc is 1.78 times less risky than Celsius Holdings. It trades about 0.04 of its potential returns per unit of risk. Celsius Holdings is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 2,701 in Celsius Holdings on October 21, 2024 and sell it today you would earn a total of 22.00 from holding Celsius Holdings or generate 0.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cars Inc vs. Celsius Holdings
Performance |
| Timeline |
| Cars Inc |
| Celsius Holdings |
Cars and Celsius Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cars and Celsius Holdings
The main advantage of trading using opposite Cars and Celsius Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cars position performs unexpectedly, Celsius Holdings 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 Celsius Holdings will offset losses from the drop in Celsius Holdings' long position.The idea behind Cars Inc and Celsius Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Celsius Holdings vs. Vita Coco | Celsius Holdings vs. Keurig Dr Pepper | Celsius Holdings vs. PepsiCo | Celsius Holdings vs. Coca Cola Femsa SAB |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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