Correlation Between Cars and Independence Realty
Can any of the company-specific risk be diversified away by investing in both Cars and Independence Realty 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 Independence Realty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cars Inc and Independence Realty Trust, you can compare the effects of market volatilities on Cars and Independence Realty 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 Independence Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cars and Independence Realty.
Diversification Opportunities for Cars and Independence Realty
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Cars and Independence is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Cars Inc and Independence Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Independence Realty Trust 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 Independence Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Independence Realty Trust has no effect on the direction of Cars i.e., Cars and Independence Realty go up and down completely randomly.
Pair Corralation between Cars and Independence Realty
Given the investment horizon of 90 days Cars is expected to generate 14.17 times less return on investment than Independence Realty. In addition to that, Cars is 1.88 times more volatile than Independence Realty Trust. It trades about 0.0 of its total potential returns per unit of risk. Independence Realty Trust is currently generating about 0.06 per unit of volatility. If you would invest 2,109 in Independence Realty Trust on September 12, 2024 and sell it today you would earn a total of 25.00 from holding Independence Realty Trust or generate 1.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cars Inc vs. Independence Realty Trust
Performance |
| Timeline |
| Cars Inc |
| Independence Realty Trust |
Cars and Independence Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cars and Independence Realty
The main advantage of trading using opposite Cars and Independence Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cars position performs unexpectedly, Independence Realty 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 Independence Realty will offset losses from the drop in Independence Realty's long position.| Cars vs. Group 1 Automotive | Cars vs. KAR Auction Services | Cars vs. CarMax Inc | Cars vs. Rush Enterprises A |
| Independence Realty vs. Nexpoint Residential Trust | Independence Realty vs. Clipper Realty | Independence Realty vs. Centerspace | Independence Realty vs. Equity Lifestyle Properties |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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