Correlation Between EDISON INTL and CARSALES
Can any of the company-specific risk be diversified away by investing in both EDISON INTL and CARSALES 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 EDISON INTL and CARSALES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EDISON INTL and CARSALESCOM, you can compare the effects of market volatilities on EDISON INTL and CARSALES 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 EDISON INTL with a short position of CARSALES. Check out your portfolio center. Please also check ongoing floating volatility patterns of EDISON INTL and CARSALES.
Diversification Opportunities for EDISON INTL and CARSALES
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between EDISON and CARSALES is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding EDISON INTL and CARSALESCOM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CARSALESCOM and EDISON INTL 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 EDISON INTL are associated (or correlated) with CARSALES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CARSALESCOM has no effect on the direction of EDISON INTL i.e., EDISON INTL and CARSALES go up and down completely randomly.
Pair Corralation between EDISON INTL and CARSALES
Assuming the 90 days trading horizon EDISON INTL is expected to generate 1.27 times less return on investment than CARSALES. In addition to that, EDISON INTL is 1.11 times more volatile than CARSALESCOM. It trades about 0.27 of its total potential returns per unit of risk. CARSALESCOM is currently generating about 0.38 per unit of volatility. If you would invest 2,280 in CARSALESCOM on September 1, 2024 and sell it today you would earn a total of 280.00 from holding CARSALESCOM or generate 12.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
EDISON INTL vs. CARSALESCOM
Performance |
| Timeline |
| EDISON INTL |
| CARSALESCOM |
EDISON INTL and CARSALES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EDISON INTL and CARSALES
The main advantage of trading using opposite EDISON INTL and CARSALES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EDISON INTL position performs unexpectedly, CARSALES 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 CARSALES will offset losses from the drop in CARSALES's long position.| EDISON INTL vs. CARSALESCOM | EDISON INTL vs. ITALIAN WINE BRANDS | EDISON INTL vs. United Airlines Holdings | EDISON INTL vs. Nok Airlines PCL |
| CARSALES vs. CNVISION MEDIA | CARSALES vs. OURGAME INTHOLDL 00005 | CARSALES vs. Playa Hotels Resorts | CARSALES vs. Universal Entertainment |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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