Correlation Between G2D Investments and Advance Auto
Can any of the company-specific risk be diversified away by investing in both G2D Investments and Advance Auto 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 G2D Investments and Advance Auto into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between G2D Investments and Advance Auto Parts, you can compare the effects of market volatilities on G2D Investments and Advance Auto 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 G2D Investments with a short position of Advance Auto. Check out your portfolio center. Please also check ongoing floating volatility patterns of G2D Investments and Advance Auto.
Diversification Opportunities for G2D Investments and Advance Auto
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between G2D and Advance is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding G2D Investments and Advance Auto Parts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advance Auto Parts and G2D Investments 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 G2D Investments are associated (or correlated) with Advance Auto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advance Auto Parts has no effect on the direction of G2D Investments i.e., G2D Investments and Advance Auto go up and down completely randomly.
Pair Corralation between G2D Investments and Advance Auto
Assuming the 90 days trading horizon G2D Investments is expected to generate 0.86 times more return on investment than Advance Auto. However, G2D Investments is 1.16 times less risky than Advance Auto. It trades about -0.04 of its potential returns per unit of risk. Advance Auto Parts is currently generating about -0.07 per unit of risk. If you would invest 252.00 in G2D Investments on September 1, 2024 and sell it today you would lose (47.00) from holding G2D Investments or give up 18.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
G2D Investments vs. Advance Auto Parts
Performance |
| Timeline |
| G2D Investments |
| Advance Auto Parts |
G2D Investments and Advance Auto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with G2D Investments and Advance Auto
The main advantage of trading using opposite G2D Investments and Advance Auto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if G2D Investments position performs unexpectedly, Advance Auto 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 Advance Auto will offset losses from the drop in Advance Auto's long position.| G2D Investments vs. Banco BTG Pactual | G2D Investments vs. Hsi Malls Fundo | G2D Investments vs. Habitat Ii |
| Advance Auto vs. The Trade Desk | Advance Auto vs. British American Tobacco | Advance Auto vs. METISA Metalrgica Timboense | Advance Auto vs. Telecomunicaes Brasileiras SA |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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