Correlation Between Group 1 and Lottery, Warrants
Can any of the company-specific risk be diversified away by investing in both Group 1 and Lottery, Warrants 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 Group 1 and Lottery, Warrants into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Group 1 Automotive and Lottery, Warrants, you can compare the effects of market volatilities on Group 1 and Lottery, Warrants 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 Group 1 with a short position of Lottery, Warrants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Group 1 and Lottery, Warrants.
Diversification Opportunities for Group 1 and Lottery, Warrants
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Group and Lottery, is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Group 1 Automotive and Lottery, Warrants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lottery, Warrants and Group 1 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 Group 1 Automotive are associated (or correlated) with Lottery, Warrants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lottery, Warrants has no effect on the direction of Group 1 i.e., Group 1 and Lottery, Warrants go up and down completely randomly.
Pair Corralation between Group 1 and Lottery, Warrants
Considering the 90-day investment horizon Group 1 is expected to generate 1.23 times less return on investment than Lottery, Warrants. But when comparing it to its historical volatility, Group 1 Automotive is 5.27 times less risky than Lottery, Warrants. It trades about 0.31 of its potential returns per unit of risk. Lottery, Warrants is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 0.99 in Lottery, Warrants on August 25, 2024 and sell it today you would earn a total of 0.03 from holding Lottery, Warrants or generate 3.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Group 1 Automotive vs. Lottery, Warrants
Performance |
| Timeline |
| Group 1 Automotive |
| Lottery, Warrants |
Group 1 and Lottery, Warrants Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Group 1 and Lottery, Warrants
The main advantage of trading using opposite Group 1 and Lottery, Warrants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Group 1 position performs unexpectedly, Lottery, Warrants 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 Lottery, Warrants will offset losses from the drop in Lottery, Warrants' long position.| Group 1 vs. Kingsway Financial Services | Group 1 vs. KAR Auction Services | Group 1 vs. Cango Inc | Group 1 vs. Vroom Inc |
| Lottery, Warrants vs. Lottery, Common Stock | Lottery, Warrants vs. Microvast Holdings | Lottery, Warrants vs. AEye Inc | Lottery, Warrants vs. Bakkt Holdings Warrant |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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