Correlation Between Carsales and Stagwell
Can any of the company-specific risk be diversified away by investing in both Carsales and Stagwell 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 Carsales and Stagwell 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 Stagwell, you can compare the effects of market volatilities on Carsales and Stagwell 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 Carsales with a short position of Stagwell. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carsales and Stagwell.
Diversification Opportunities for Carsales and Stagwell
Good diversification
The 3 months correlation between Carsales and Stagwell is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding CarsalesCom Ltd ADR and Stagwell in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stagwell and Carsales 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 Stagwell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stagwell has no effect on the direction of Carsales i.e., Carsales and Stagwell go up and down completely randomly.
Pair Corralation between Carsales and Stagwell
Assuming the 90 days horizon Carsales is expected to generate 6.29 times less return on investment than Stagwell. In addition to that, Carsales is 1.06 times more volatile than Stagwell. It trades about 0.06 of its total potential returns per unit of risk. Stagwell is currently generating about 0.43 per unit of volatility. If you would invest 615.00 in Stagwell on August 26, 2024 and sell it today you would earn a total of 167.00 from holding Stagwell or generate 27.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CarsalesCom Ltd ADR vs. Stagwell
Performance |
| Timeline |
| CarsalesCom ADR |
| Stagwell |
Carsales and Stagwell Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carsales and Stagwell
The main advantage of trading using opposite Carsales and Stagwell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carsales position performs unexpectedly, Stagwell 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 Stagwell will offset losses from the drop in Stagwell's long position.| Carsales vs. Tencent Holdings | Carsales vs. Trivago NV | Carsales vs. YY Inc Class | Carsales vs. DouYu International Holdings |
| Stagwell vs. Innovid Corp | Stagwell vs. Interpublic Group of | Stagwell vs. Cimpress NV | Stagwell vs. Criteo Sa |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Stocks Directory Find actively traded stocks across global markets |