Correlation Between CarsalesCom and Mayfair Gold
Can any of the company-specific risk be diversified away by investing in both CarsalesCom and Mayfair Gold 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 CarsalesCom and Mayfair Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CarsalesCom Ltd ADR and Mayfair Gold Corp, you can compare the effects of market volatilities on CarsalesCom and Mayfair Gold 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 CarsalesCom with a short position of Mayfair Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of CarsalesCom and Mayfair Gold.
Diversification Opportunities for CarsalesCom and Mayfair Gold
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CarsalesCom and Mayfair is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding CarsalesCom Ltd ADR and Mayfair Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mayfair Gold Corp and CarsalesCom 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 CarsalesCom Ltd ADR are associated (or correlated) with Mayfair Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mayfair Gold Corp has no effect on the direction of CarsalesCom i.e., CarsalesCom and Mayfair Gold go up and down completely randomly.
Pair Corralation between CarsalesCom and Mayfair Gold
Assuming the 90 days horizon CarsalesCom Ltd ADR is expected to generate 0.87 times more return on investment than Mayfair Gold. However, CarsalesCom Ltd ADR is 1.15 times less risky than Mayfair Gold. It trades about 0.08 of its potential returns per unit of risk. Mayfair Gold Corp is currently generating about 0.03 per unit of risk. If you would invest 2,651 in CarsalesCom Ltd ADR on September 12, 2024 and sell it today you would earn a total of 2,756 from holding CarsalesCom Ltd ADR or generate 103.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 88.87% |
| Values | Daily Returns |
CarsalesCom Ltd ADR vs. Mayfair Gold Corp
Performance |
| Timeline |
| CarsalesCom ADR |
| Mayfair Gold Corp |
CarsalesCom and Mayfair Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CarsalesCom and Mayfair Gold
The main advantage of trading using opposite CarsalesCom and Mayfair Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CarsalesCom position performs unexpectedly, Mayfair Gold 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 Mayfair Gold will offset losses from the drop in Mayfair Gold's long position.| CarsalesCom vs. Quizam Media | CarsalesCom vs. DGTL Holdings | CarsalesCom vs. Tinybeans Group Limited | CarsalesCom vs. Sabio Holdings |
| Mayfair Gold vs. Agnico Eagle Mines | Mayfair Gold vs. B2Gold Corp | Mayfair Gold vs. Pan American Silver | Mayfair Gold vs. Gold Fields Ltd |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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