Correlation Between Cars and SLR Investment
Can any of the company-specific risk be diversified away by investing in both Cars and SLR Investment 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 SLR Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cars Inc and SLR Investment Corp, you can compare the effects of market volatilities on Cars and SLR Investment 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 SLR Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cars and SLR Investment.
Diversification Opportunities for Cars and SLR Investment
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Cars and SLR is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Cars Inc and SLR Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SLR Investment Corp 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 SLR Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SLR Investment Corp has no effect on the direction of Cars i.e., Cars and SLR Investment go up and down completely randomly.
Pair Corralation between Cars and SLR Investment
Assuming the 90 days horizon Cars Inc is expected to under-perform the SLR Investment. In addition to that, Cars is 1.23 times more volatile than SLR Investment Corp. It trades about -0.35 of its total potential returns per unit of risk. SLR Investment Corp is currently generating about 0.05 per unit of volatility. If you would invest 1,546 in SLR Investment Corp on October 11, 2024 and sell it today you would earn a total of 18.00 from holding SLR Investment Corp or generate 1.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 94.44% |
| Values | Daily Returns |
Cars Inc vs. SLR Investment Corp
Performance |
| Timeline |
| Cars Inc |
| SLR Investment Corp |
Cars and SLR Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cars and SLR Investment
The main advantage of trading using opposite Cars and SLR Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cars position performs unexpectedly, SLR Investment 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 SLR Investment will offset losses from the drop in SLR Investment's long position.| Cars vs. Direct Line Insurance | Cars vs. The Hanover Insurance | Cars vs. Reinsurance Group of | Cars vs. American Public Education |
| SLR Investment vs. UNIQA INSURANCE GR | SLR Investment vs. COLUMBIA SPORTSWEAR | SLR Investment vs. UmweltBank AG | SLR Investment 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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