Correlation Between EIDESVIK OFFSHORE and AUTO TRADER
Can any of the company-specific risk be diversified away by investing in both EIDESVIK OFFSHORE 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 EIDESVIK OFFSHORE and AUTO TRADER into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EIDESVIK OFFSHORE NK and AUTO TRADER ADR, you can compare the effects of market volatilities on EIDESVIK OFFSHORE 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 EIDESVIK OFFSHORE with a short position of AUTO TRADER. Check out your portfolio center. Please also check ongoing floating volatility patterns of EIDESVIK OFFSHORE and AUTO TRADER.
Diversification Opportunities for EIDESVIK OFFSHORE and AUTO TRADER
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between EIDESVIK and AUTO is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding EIDESVIK OFFSHORE NK and AUTO TRADER ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AUTO TRADER ADR and EIDESVIK OFFSHORE 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 EIDESVIK OFFSHORE NK 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 ADR has no effect on the direction of EIDESVIK OFFSHORE i.e., EIDESVIK OFFSHORE and AUTO TRADER go up and down completely randomly.
Pair Corralation between EIDESVIK OFFSHORE and AUTO TRADER
Assuming the 90 days horizon EIDESVIK OFFSHORE is expected to generate 1.41 times less return on investment than AUTO TRADER. In addition to that, EIDESVIK OFFSHORE is 1.82 times more volatile than AUTO TRADER ADR. It trades about 0.02 of its total potential returns per unit of risk. AUTO TRADER ADR is currently generating about 0.06 per unit of volatility. If you would invest 151.00 in AUTO TRADER ADR on November 30, 2024 and sell it today you would earn a total of 81.00 from holding AUTO TRADER ADR or generate 53.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
EIDESVIK OFFSHORE NK vs. AUTO TRADER ADR
Performance |
| Timeline |
| EIDESVIK OFFSHORE |
| AUTO TRADER ADR |
EIDESVIK OFFSHORE and AUTO TRADER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EIDESVIK OFFSHORE and AUTO TRADER
The main advantage of trading using opposite EIDESVIK OFFSHORE and AUTO TRADER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EIDESVIK OFFSHORE 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.| EIDESVIK OFFSHORE vs. Eskay Mining Corp | EIDESVIK OFFSHORE vs. Ringmetall SE | EIDESVIK OFFSHORE vs. BORR DRILLING NEW | EIDESVIK OFFSHORE vs. East Africa Metals |
| AUTO TRADER vs. AGNC Investment Corp | AUTO TRADER vs. Apollo Investment Corp | AUTO TRADER vs. Ubisoft Entertainment SA | AUTO TRADER vs. ATRESMEDIA |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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