Correlation Between Informa PLC and Auto Trader
Can any of the company-specific risk be diversified away by investing in both Informa PLC 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 Informa PLC and Auto Trader into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Informa PLC ADR and Auto Trader Group, you can compare the effects of market volatilities on Informa PLC 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 Informa PLC with a short position of Auto Trader. Check out your portfolio center. Please also check ongoing floating volatility patterns of Informa PLC and Auto Trader.
Diversification Opportunities for Informa PLC and Auto Trader
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Informa and Auto is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Informa PLC ADR and Auto Trader Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auto Trader Group and Informa PLC 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 Informa PLC ADR 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 Group has no effect on the direction of Informa PLC i.e., Informa PLC and Auto Trader go up and down completely randomly.
Pair Corralation between Informa PLC and Auto Trader
Assuming the 90 days horizon Informa PLC ADR is expected to generate 1.18 times more return on investment than Auto Trader. However, Informa PLC is 1.18 times more volatile than Auto Trader Group. It trades about 0.02 of its potential returns per unit of risk. Auto Trader Group is currently generating about 0.0 per unit of risk. If you would invest 2,117 in Informa PLC ADR on August 30, 2024 and sell it today you would earn a total of 36.00 from holding Informa PLC ADR or generate 1.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Informa PLC ADR vs. Auto Trader Group
Performance |
| Timeline |
| Informa PLC ADR |
| Auto Trader Group |
Informa PLC and Auto Trader Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Informa PLC and Auto Trader
The main advantage of trading using opposite Informa PLC and Auto Trader positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Informa PLC 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.| Informa PLC vs. Legible | Informa PLC vs. FP Newspapers | Informa PLC vs. RCS MediaGroup SpA | Informa PLC vs. Scholastic |
| Auto Trader vs. Tinybeans Group Limited | Auto Trader vs. DGTL Holdings | Auto Trader vs. Sabio Holdings | Auto Trader vs. Zoomd Technologies |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
Other Complementary Tools
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital |