Correlation Between Clean Power and Auto Trader
Can any of the company-specific risk be diversified away by investing in both Clean Power and Auto Trader 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 Clean Power and Auto Trader into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Clean Power Hydrogen and Auto Trader Group, you can compare the effects of market volatilities on Clean Power and Auto Trader 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 Clean Power with a short position of Auto Trader. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clean Power and Auto Trader.
Diversification Opportunities for Clean Power and Auto Trader
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Clean and Auto is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Clean Power Hydrogen and Auto Trader Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auto Trader Group and Clean Power 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 Clean Power Hydrogen are associated (or correlated) with Auto Trader. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auto Trader Group has no effect on the direction of Clean Power i.e., Clean Power and Auto Trader go up and down completely randomly.
Pair Corralation between Clean Power and Auto Trader
Assuming the 90 days trading horizon Clean Power Hydrogen is expected to under-perform the Auto Trader. In addition to that, Clean Power is 1.52 times more volatile than Auto Trader Group. It trades about -0.16 of its total potential returns per unit of risk. Auto Trader Group is currently generating about 0.07 per unit of volatility. If you would invest 78,074 in Auto Trader Group on October 24, 2024 and sell it today you would earn a total of 1,026 from holding Auto Trader Group or generate 1.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Clean Power Hydrogen vs. Auto Trader Group
Performance |
| Timeline |
| Clean Power Hydrogen |
| Auto Trader Group |
Clean Power and Auto Trader Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clean Power and Auto Trader
The main advantage of trading using opposite Clean Power and Auto Trader positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clean Power position performs unexpectedly, Auto Trader 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 Auto Trader will offset losses from the drop in Auto Trader's long position.| Clean Power vs. Axway Software SA | Clean Power vs. Adriatic Metals | Clean Power vs. SBM Offshore NV | Clean Power vs. Bloomsbury Publishing Plc |
| Auto Trader vs. Ashtead Technology Holdings | Auto Trader vs. Clean Power Hydrogen | Auto Trader vs. DXC Technology Co | Auto Trader vs. Alfa Financial Software |
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 CEOs Directory module to screen CEOs from public companies around the world.
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