Correlation Between MSA Safety and Carsales
Can any of the company-specific risk be diversified away by investing in both MSA Safety 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 MSA Safety and Carsales into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MSA Safety Incorporated and Carsales, you can compare the effects of market volatilities on MSA Safety 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 MSA Safety with a short position of Carsales. Check out your portfolio center. Please also check ongoing floating volatility patterns of MSA Safety and Carsales.
Diversification Opportunities for MSA Safety and Carsales
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MSA and Carsales is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding MSA Safety Incorporated and Carsales in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carsales and MSA Safety 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 MSA Safety Incorporated 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 Carsales has no effect on the direction of MSA Safety i.e., MSA Safety and Carsales go up and down completely randomly.
Pair Corralation between MSA Safety and Carsales
Assuming the 90 days horizon MSA Safety is expected to generate 38.06 times less return on investment than Carsales. But when comparing it to its historical volatility, MSA Safety Incorporated is 1.5 times less risky than Carsales. It trades about 0.01 of its potential returns per unit of risk. Carsales is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 2,220 in Carsales on November 7, 2024 and sell it today you would earn a total of 200.00 from holding Carsales or generate 9.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MSA Safety Incorporated vs. Carsales
Performance |
| Timeline |
| MSA Safety |
| Carsales |
MSA Safety and Carsales Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MSA Safety and Carsales
The main advantage of trading using opposite MSA Safety and Carsales positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MSA Safety 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' long position.| MSA Safety vs. MHP Hotel AG | MSA Safety vs. INTERCONT HOTELS | MSA Safety vs. THORNEY TECHS LTD | MSA Safety vs. Wyndham Hotels Resorts |
| Carsales vs. INSURANCE AUST GRP | Carsales vs. Gaztransport Technigaz SA | Carsales vs. HANOVER INSURANCE | Carsales vs. USWE SPORTS AB |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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