Correlation Between Employers Holdings and CarsalesCom
Can any of the company-specific risk be diversified away by investing in both Employers Holdings and CarsalesCom 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 Employers Holdings and CarsalesCom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Employers Holdings and CarsalesCom Ltd ADR, you can compare the effects of market volatilities on Employers Holdings and CarsalesCom 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 Employers Holdings with a short position of CarsalesCom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Employers Holdings and CarsalesCom.
Diversification Opportunities for Employers Holdings and CarsalesCom
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Employers and CarsalesCom is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Employers Holdings and CarsalesCom Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CarsalesCom ADR and Employers Holdings 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 Employers Holdings are associated (or correlated) with CarsalesCom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CarsalesCom ADR has no effect on the direction of Employers Holdings i.e., Employers Holdings and CarsalesCom go up and down completely randomly.
Pair Corralation between Employers Holdings and CarsalesCom
Considering the 90-day investment horizon Employers Holdings is expected to under-perform the CarsalesCom. But the stock apears to be less risky and, when comparing its historical volatility, Employers Holdings is 3.46 times less risky than CarsalesCom. The stock trades about -0.21 of its potential returns per unit of risk. The CarsalesCom Ltd ADR is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 4,840 in CarsalesCom Ltd ADR on September 12, 2024 and sell it today you would earn a total of 567.00 from holding CarsalesCom Ltd ADR or generate 11.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Employers Holdings vs. CarsalesCom Ltd ADR
Performance |
| Timeline |
| Employers Holdings |
| CarsalesCom ADR |
Employers Holdings and CarsalesCom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Employers Holdings and CarsalesCom
The main advantage of trading using opposite Employers Holdings and CarsalesCom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Employers Holdings position performs unexpectedly, CarsalesCom 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 CarsalesCom will offset losses from the drop in CarsalesCom's long position.| Employers Holdings vs. First American | Employers Holdings vs. Assurant | Employers Holdings vs. NMI Holdings | Employers Holdings vs. MGIC Investment Corp |
| CarsalesCom vs. Quizam Media | CarsalesCom vs. DGTL Holdings | CarsalesCom vs. Tinybeans Group Limited | CarsalesCom vs. Sabio Holdings |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
Other Complementary Tools
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges |