Correlation Between Compugroup Medical and Penske Automotive
Can any of the company-specific risk be diversified away by investing in both Compugroup Medical and Penske Automotive 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 Compugroup Medical and Penske Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compugroup Medical SE and Penske Automotive Group, you can compare the effects of market volatilities on Compugroup Medical and Penske Automotive 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 Compugroup Medical with a short position of Penske Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compugroup Medical and Penske Automotive.
Diversification Opportunities for Compugroup Medical and Penske Automotive
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Compugroup and Penske is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Compugroup Medical SE and Penske Automotive Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Penske Automotive and Compugroup Medical 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 Compugroup Medical SE are associated (or correlated) with Penske Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Penske Automotive has no effect on the direction of Compugroup Medical i.e., Compugroup Medical and Penske Automotive go up and down completely randomly.
Pair Corralation between Compugroup Medical and Penske Automotive
Assuming the 90 days horizon Compugroup Medical SE is expected to under-perform the Penske Automotive. In addition to that, Compugroup Medical is 1.44 times more volatile than Penske Automotive Group. It trades about -0.05 of its total potential returns per unit of risk. Penske Automotive Group is currently generating about 0.04 per unit of volatility. If you would invest 11,338 in Penske Automotive Group on September 3, 2024 and sell it today you would earn a total of 4,362 from holding Penske Automotive Group or generate 38.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compugroup Medical SE vs. Penske Automotive Group
Performance |
| Timeline |
| Compugroup Medical |
| Penske Automotive |
Compugroup Medical and Penske Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compugroup Medical and Penske Automotive
The main advantage of trading using opposite Compugroup Medical and Penske Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compugroup Medical position performs unexpectedly, Penske Automotive 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 Penske Automotive will offset losses from the drop in Penske Automotive's long position.| Compugroup Medical vs. ATRESMEDIA | Compugroup Medical vs. Corsair Gaming | Compugroup Medical vs. Hollywood Bowl Group | Compugroup Medical vs. RCS MediaGroup SpA |
| Penske Automotive vs. WIMFARM SA EO | Penske Automotive vs. Granite Construction | Penske Automotive vs. ANTA SPORTS PRODUCT | Penske Automotive vs. PARKEN Sport Entertainment |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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