Correlation Between Cars and Greencoat
Can any of the company-specific risk be diversified away by investing in both Cars and Greencoat 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 Greencoat into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cars Inc and Greencoat UK Wind, you can compare the effects of market volatilities on Cars and Greencoat 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 Greencoat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cars and Greencoat.
Diversification Opportunities for Cars and Greencoat
Very good diversification
The 3 months correlation between Cars and Greencoat is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Cars Inc and Greencoat UK Wind in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greencoat UK Wind 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 Greencoat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greencoat UK Wind has no effect on the direction of Cars i.e., Cars and Greencoat go up and down completely randomly.
Pair Corralation between Cars and Greencoat
Assuming the 90 days horizon Cars is expected to generate 1.15 times less return on investment than Greencoat. But when comparing it to its historical volatility, Cars Inc is 1.29 times less risky than Greencoat. It trades about 0.02 of its potential returns per unit of risk. Greencoat UK Wind is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 156.00 in Greencoat UK Wind on September 14, 2024 and sell it today you would earn a total of 2.00 from holding Greencoat UK Wind or generate 1.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Cars Inc vs. Greencoat UK Wind
Performance |
| Timeline |
| Cars Inc |
| Greencoat UK Wind |
Cars and Greencoat Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cars and Greencoat
The main advantage of trading using opposite Cars and Greencoat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cars position performs unexpectedly, Greencoat 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 Greencoat will offset losses from the drop in Greencoat's long position.| Cars vs. Superior Plus Corp | Cars vs. SIVERS SEMICONDUCTORS AB | Cars vs. Norsk Hydro ASA | Cars vs. Reliance Steel Aluminum |
| Greencoat vs. AAC TECHNOLOGHLDGADR | Greencoat vs. Zijin Mining Group | Greencoat vs. BJs Restaurants | Greencoat vs. SERI INDUSTRIAL EO |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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