Correlation Between DIeteren Group and AutoNation

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Can any of the company-specific risk be diversified away by investing in both DIeteren Group and AutoNation 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 DIeteren Group and AutoNation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DIeteren Group SA and AutoNation, you can compare the effects of market volatilities on DIeteren Group and AutoNation 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 DIeteren Group with a short position of AutoNation. Check out your portfolio center. Please also check ongoing floating volatility patterns of DIeteren Group and AutoNation.

Diversification Opportunities for DIeteren Group and AutoNation

0.45
  Correlation Coefficient

Very weak diversification

The 3 months correlation between DIeteren and AutoNation is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding DIeteren Group SA and AutoNation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AutoNation and DIeteren Group 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 DIeteren Group SA are associated (or correlated) with AutoNation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AutoNation has no effect on the direction of DIeteren Group i.e., DIeteren Group and AutoNation go up and down completely randomly.

Pair Corralation between DIeteren Group and AutoNation

Assuming the 90 days trading horizon DIeteren Group SA is expected to generate 3.21 times more return on investment than AutoNation. However, DIeteren Group is 3.21 times more volatile than AutoNation. It trades about 0.23 of its potential returns per unit of risk. AutoNation is currently generating about -0.03 per unit of risk. If you would invest  13,247  in DIeteren Group SA on September 24, 2024 and sell it today you would earn a total of  2,993  from holding DIeteren Group SA or generate 22.59% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

DIeteren Group SA  vs.  AutoNation

 Performance 
       Timeline  
DIeteren Group SA 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in DIeteren Group SA are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, DIeteren Group reported solid returns over the last few months and may actually be approaching a breakup point.
AutoNation 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in AutoNation are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, AutoNation is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

DIeteren Group and AutoNation Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with DIeteren Group and AutoNation

The main advantage of trading using opposite DIeteren Group and AutoNation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DIeteren Group position performs unexpectedly, AutoNation 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 AutoNation will offset losses from the drop in AutoNation's long position.
The idea behind DIeteren Group SA and AutoNation pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Stocks Directory module to find actively traded stocks across global markets.

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