Correlation Between Cars and Peel Mining
Can any of the company-specific risk be diversified away by investing in both Cars and Peel Mining 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 Peel Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cars Inc and Peel Mining Limited, you can compare the effects of market volatilities on Cars and Peel Mining 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 Peel Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cars and Peel Mining.
Diversification Opportunities for Cars and Peel Mining
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Cars and Peel is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Cars Inc and Peel Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peel Mining Limited 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 Peel Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peel Mining Limited has no effect on the direction of Cars i.e., Cars and Peel Mining go up and down completely randomly.
Pair Corralation between Cars and Peel Mining
Assuming the 90 days horizon Cars is expected to generate 2.86 times less return on investment than Peel Mining. But when comparing it to its historical volatility, Cars Inc is 3.19 times less risky than Peel Mining. It trades about 0.07 of its potential returns per unit of risk. Peel Mining Limited is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 6.60 in Peel Mining Limited on September 15, 2024 and sell it today you would earn a total of 0.35 from holding Peel Mining Limited or generate 5.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Cars Inc vs. Peel Mining Limited
Performance |
| Timeline |
| Cars Inc |
| Peel Mining Limited |
Cars and Peel Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cars and Peel Mining
The main advantage of trading using opposite Cars and Peel Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cars position performs unexpectedly, Peel Mining 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 Peel Mining will offset losses from the drop in Peel Mining's long position.| Cars vs. Superior Plus Corp | Cars vs. SIVERS SEMICONDUCTORS AB | Cars vs. Norsk Hydro ASA | Cars vs. Reliance Steel Aluminum |
| Peel Mining vs. CENTURIA OFFICE REIT | Peel Mining vs. Haverty Furniture Companies | Peel Mining vs. Tri Pointe Homes | Peel Mining vs. Cars Inc |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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