Correlation Between Easy Software and AUTO TRADER
Can any of the company-specific risk be diversified away by investing in both Easy Software 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 Easy Software and AUTO TRADER into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Easy Software AG and AUTO TRADER ADR, you can compare the effects of market volatilities on Easy Software 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 Easy Software with a short position of AUTO TRADER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Easy Software and AUTO TRADER.
Diversification Opportunities for Easy Software and AUTO TRADER
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Easy and AUTO is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Easy Software AG 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 Easy Software 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 Easy Software AG 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 Easy Software i.e., Easy Software and AUTO TRADER go up and down completely randomly.
Pair Corralation between Easy Software and AUTO TRADER
Assuming the 90 days trading horizon Easy Software AG is expected to under-perform the AUTO TRADER. In addition to that, Easy Software is 2.18 times more volatile than AUTO TRADER ADR. It trades about -0.1 of its total potential returns per unit of risk. AUTO TRADER ADR is currently generating about -0.15 per unit of volatility. If you would invest 233.00 in AUTO TRADER ADR on October 30, 2024 and sell it today you would lose (11.00) from holding AUTO TRADER ADR or give up 4.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Easy Software AG vs. AUTO TRADER ADR
Performance |
| Timeline |
| Easy Software AG |
| AUTO TRADER ADR |
Easy Software and AUTO TRADER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Easy Software and AUTO TRADER
The main advantage of trading using opposite Easy Software and AUTO TRADER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Easy Software 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.| Easy Software vs. ScanSource | Easy Software vs. MOVIE GAMES SA | Easy Software vs. CanSino Biologics | Easy Software vs. DFS Furniture PLC |
| AUTO TRADER vs. Alphabet Class A | AUTO TRADER vs. Meta Platforms | AUTO TRADER vs. Tencent Holdings Ltd | AUTO TRADER vs. Tencent 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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