Correlation Between METTLER TOLEDO and AUTO TRADER
Can any of the company-specific risk be diversified away by investing in both METTLER TOLEDO 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 METTLER TOLEDO and AUTO TRADER into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between METTLER TOLEDO INTL and AUTO TRADER ADR, you can compare the effects of market volatilities on METTLER TOLEDO 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 METTLER TOLEDO with a short position of AUTO TRADER. Check out your portfolio center. Please also check ongoing floating volatility patterns of METTLER TOLEDO and AUTO TRADER.
Diversification Opportunities for METTLER TOLEDO and AUTO TRADER
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between METTLER and AUTO is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding METTLER TOLEDO INTL 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 METTLER TOLEDO 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 METTLER TOLEDO INTL 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 METTLER TOLEDO i.e., METTLER TOLEDO and AUTO TRADER go up and down completely randomly.
Pair Corralation between METTLER TOLEDO and AUTO TRADER
Assuming the 90 days trading horizon METTLER TOLEDO INTL is expected to under-perform the AUTO TRADER. In addition to that, METTLER TOLEDO is 1.32 times more volatile than AUTO TRADER ADR. It trades about -0.04 of its total potential returns per unit of risk. AUTO TRADER ADR is currently generating about 0.06 per unit of volatility. If you would invest 222.00 in AUTO TRADER ADR on November 27, 2024 and sell it today you would earn a total of 4.00 from holding AUTO TRADER ADR or generate 1.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
METTLER TOLEDO INTL vs. AUTO TRADER ADR
Performance |
| Timeline |
| METTLER TOLEDO INTL |
| AUTO TRADER ADR |
METTLER TOLEDO and AUTO TRADER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with METTLER TOLEDO and AUTO TRADER
The main advantage of trading using opposite METTLER TOLEDO and AUTO TRADER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if METTLER TOLEDO 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.| METTLER TOLEDO vs. Tianjin Capital Environmental | METTLER TOLEDO vs. Dentsply Sirona | METTLER TOLEDO vs. American Airlines Group | METTLER TOLEDO vs. SINGAPORE AIRLINES |
| AUTO TRADER vs. GLG LIFE TECH | AUTO TRADER vs. Firan Technology Group | AUTO TRADER vs. CHEMICAL INDUSTRIES | AUTO TRADER vs. X FAB Silicon Foundries |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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