Correlation Between Cars and QEP Resources
Can any of the company-specific risk be diversified away by investing in both Cars and QEP Resources 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 QEP Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cars Inc and QEP Resources, you can compare the effects of market volatilities on Cars and QEP Resources 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 QEP Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cars and QEP Resources.
Diversification Opportunities for Cars and QEP Resources
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Cars and QEP is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Cars Inc and QEP Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QEP Resources 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 QEP Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QEP Resources has no effect on the direction of Cars i.e., Cars and QEP Resources go up and down completely randomly.
Pair Corralation between Cars and QEP Resources
If you would invest 1,413 in Cars Inc on September 26, 2024 and sell it today you would earn a total of 323.00 from holding Cars Inc or generate 22.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Cars Inc vs. QEP Resources
Performance |
| Timeline |
| Cars Inc |
| QEP Resources |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Cars and QEP Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cars and QEP Resources
The main advantage of trading using opposite Cars and QEP Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cars position performs unexpectedly, QEP Resources 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 QEP Resources will offset losses from the drop in QEP Resources' long position.The idea behind Cars Inc and QEP Resources 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.| QEP Resources vs. Thor Industries | QEP Resources vs. Aptiv PLC | QEP Resources vs. Cars Inc | QEP Resources vs. Boston Beer |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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