Correlation Between Deutz AG and Auto Trader
Can any of the company-specific risk be diversified away by investing in both Deutz AG 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 Deutz AG and Auto Trader into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Deutz AG and Auto Trader Group, you can compare the effects of market volatilities on Deutz AG 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 Deutz AG with a short position of Auto Trader. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutz AG and Auto Trader.
Diversification Opportunities for Deutz AG and Auto Trader
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Deutz and Auto is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Deutz AG 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 Deutz AG 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 Deutz AG 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 Deutz AG i.e., Deutz AG and Auto Trader go up and down completely randomly.
Pair Corralation between Deutz AG and Auto Trader
Assuming the 90 days trading horizon Deutz AG is expected to generate 1.15 times less return on investment than Auto Trader. In addition to that, Deutz AG is 1.07 times more volatile than Auto Trader Group. It trades about 0.19 of its total potential returns per unit of risk. Auto Trader Group is currently generating about 0.24 per unit of volatility. If you would invest 950.00 in Auto Trader Group on September 14, 2024 and sell it today you would earn a total of 50.00 from holding Auto Trader Group or generate 5.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Deutz AG vs. Auto Trader Group
Performance |
| Timeline |
| Deutz AG |
| Auto Trader Group |
Deutz AG and Auto Trader Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Deutz AG and Auto Trader
The main advantage of trading using opposite Deutz AG and Auto Trader positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deutz AG 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.| Deutz AG vs. Charoen Pokphand Foods | Deutz AG vs. AUSTEVOLL SEAFOOD | Deutz AG vs. Associated British Foods | Deutz AG vs. Autohome ADR |
| Auto Trader vs. Apple Inc | Auto Trader vs. Apple Inc | Auto Trader vs. Apple Inc | Auto Trader vs. Apple Inc |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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