Correlation Between Global Dominion and CIE Automotive
Can any of the company-specific risk be diversified away by investing in both Global Dominion and CIE Automotive 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 Global Dominion and CIE Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Dominion Access and CIE Automotive SA, you can compare the effects of market volatilities on Global Dominion and CIE Automotive 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 Global Dominion with a short position of CIE Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Dominion and CIE Automotive.
Diversification Opportunities for Global Dominion and CIE Automotive
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Global and CIE is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Global Dominion Access and CIE Automotive SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CIE Automotive SA and Global Dominion 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 Global Dominion Access are associated (or correlated) with CIE Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CIE Automotive SA has no effect on the direction of Global Dominion i.e., Global Dominion and CIE Automotive go up and down completely randomly.
Pair Corralation between Global Dominion and CIE Automotive
Assuming the 90 days trading horizon Global Dominion Access is expected to generate 1.47 times more return on investment than CIE Automotive. However, Global Dominion is 1.47 times more volatile than CIE Automotive SA. It trades about 0.24 of its potential returns per unit of risk. CIE Automotive SA is currently generating about 0.09 per unit of risk. If you would invest 283.00 in Global Dominion Access on November 3, 2024 and sell it today you would earn a total of 20.00 from holding Global Dominion Access or generate 7.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Dominion Access vs. CIE Automotive SA
Performance |
| Timeline |
| Global Dominion Access |
| CIE Automotive SA |
Global Dominion and CIE Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Dominion and CIE Automotive
The main advantage of trading using opposite Global Dominion and CIE Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Dominion position performs unexpectedly, CIE Automotive 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 CIE Automotive will offset losses from the drop in CIE Automotive's long position.| Global Dominion vs. CIE Automotive SA | Global Dominion vs. Gestamp Automocion SA | Global Dominion vs. Vidrala SA | Global Dominion vs. Miquel y Costas |
| CIE Automotive vs. Viscofan | CIE Automotive vs. Gestamp Automocion SA | CIE Automotive vs. ENCE Energa y | CIE Automotive vs. Acerinox |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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