Correlation Between Digital Ally and TrueCar
Can any of the company-specific risk be diversified away by investing in both Digital Ally and TrueCar 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 Digital Ally and TrueCar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Digital Ally and TrueCar, you can compare the effects of market volatilities on Digital Ally and TrueCar 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 Digital Ally with a short position of TrueCar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digital Ally and TrueCar.
Diversification Opportunities for Digital Ally and TrueCar
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Digital and TrueCar is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Digital Ally and TrueCar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TrueCar and Digital Ally 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 Digital Ally are associated (or correlated) with TrueCar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TrueCar has no effect on the direction of Digital Ally i.e., Digital Ally and TrueCar go up and down completely randomly.
Pair Corralation between Digital Ally and TrueCar
Given the investment horizon of 90 days Digital Ally is expected to under-perform the TrueCar. In addition to that, Digital Ally is 3.59 times more volatile than TrueCar. It trades about -0.02 of its total potential returns per unit of risk. TrueCar is currently generating about 0.14 per unit of volatility. If you would invest 377.00 in TrueCar on August 28, 2024 and sell it today you would earn a total of 37.00 from holding TrueCar or generate 9.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Digital Ally vs. TrueCar
Performance |
| Timeline |
| Digital Ally |
| TrueCar |
Digital Ally and TrueCar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Digital Ally and TrueCar
The main advantage of trading using opposite Digital Ally and TrueCar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digital Ally position performs unexpectedly, TrueCar 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 TrueCar will offset losses from the drop in TrueCar's long position.| Digital Ally vs. Zedge Inc | Digital Ally vs. 36Kr Holdings | Digital Ally vs. MediaAlpha | Digital Ally vs. Vivid Seats |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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