Correlation Between CarsalesCom and Western Acquisition
Can any of the company-specific risk be diversified away by investing in both CarsalesCom and Western Acquisition 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 Western Acquisition 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 Western Acquisition Ventures, you can compare the effects of market volatilities on CarsalesCom and Western Acquisition 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 Western Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of CarsalesCom and Western Acquisition.
Diversification Opportunities for CarsalesCom and Western Acquisition
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between CarsalesCom and Western is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding CarsalesCom Ltd ADR and Western Acquisition Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Acquisition 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 Western Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Acquisition has no effect on the direction of CarsalesCom i.e., CarsalesCom and Western Acquisition go up and down completely randomly.
Pair Corralation between CarsalesCom and Western Acquisition
Assuming the 90 days horizon CarsalesCom Ltd ADR is expected to generate 1.81 times more return on investment than Western Acquisition. However, CarsalesCom is 1.81 times more volatile than Western Acquisition Ventures. It trades about 0.08 of its potential returns per unit of risk. Western Acquisition Ventures is currently generating about -0.01 per unit of risk. If you would invest 3,299 in CarsalesCom Ltd ADR on September 12, 2024 and sell it today you would earn a total of 2,108 from holding CarsalesCom Ltd ADR or generate 63.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 84.38% |
| Values | Daily Returns |
CarsalesCom Ltd ADR vs. Western Acquisition Ventures
Performance |
| Timeline |
| CarsalesCom ADR |
| Western Acquisition |
CarsalesCom and Western Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CarsalesCom and Western Acquisition
The main advantage of trading using opposite CarsalesCom and Western Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CarsalesCom position performs unexpectedly, Western Acquisition 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 Western Acquisition will offset losses from the drop in Western Acquisition's long position.| CarsalesCom vs. Quizam Media | CarsalesCom vs. DGTL Holdings | CarsalesCom vs. Tinybeans Group Limited | CarsalesCom vs. Sabio Holdings |
| Western Acquisition vs. HUMANA INC | Western Acquisition vs. Barloworld Ltd ADR | Western Acquisition vs. Morningstar Unconstrained Allocation | Western Acquisition vs. Thrivent High Yield |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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