Correlation Between Trump Media and TrueCar
Can any of the company-specific risk be diversified away by investing in both Trump Media 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 Trump Media and TrueCar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Trump Media Technology and TrueCar, you can compare the effects of market volatilities on Trump Media 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 Trump Media with a short position of TrueCar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trump Media and TrueCar.
Diversification Opportunities for Trump Media and TrueCar
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Trump and TrueCar is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Trump Media Technology and TrueCar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TrueCar and Trump Media 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 Trump Media Technology 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 Trump Media i.e., Trump Media and TrueCar go up and down completely randomly.
Pair Corralation between Trump Media and TrueCar
Assuming the 90 days horizon Trump Media Technology is expected to generate 2.84 times more return on investment than TrueCar. However, Trump Media is 2.84 times more volatile than TrueCar. It trades about 0.05 of its potential returns per unit of risk. TrueCar is currently generating about 0.03 per unit of risk. If you would invest 2,315 in Trump Media Technology on November 4, 2024 and sell it today you would lose (134.00) from holding Trump Media Technology or give up 5.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 43.64% |
| Values | Daily Returns |
Trump Media Technology vs. TrueCar
Performance |
| Timeline |
| Trump Media Technology |
| TrueCar |
Trump Media and TrueCar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Trump Media and TrueCar
The main advantage of trading using opposite Trump Media and TrueCar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trump Media 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.| Trump Media vs. Deluxe | Trump Media vs. MGIC Investment Corp | Trump Media vs. East West Bancorp | Trump Media vs. Black Hills |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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