Correlation Between Platinum Investment and Auto Trader
Can any of the company-specific risk be diversified away by investing in both Platinum Investment 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 Platinum Investment and Auto Trader into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Platinum Investment Management and Auto Trader Group, you can compare the effects of market volatilities on Platinum Investment 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 Platinum Investment with a short position of Auto Trader. Check out your portfolio center. Please also check ongoing floating volatility patterns of Platinum Investment and Auto Trader.
Diversification Opportunities for Platinum Investment and Auto Trader
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Platinum and Auto is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Platinum Investment Management 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 Platinum Investment 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 Platinum Investment Management 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 Platinum Investment i.e., Platinum Investment and Auto Trader go up and down completely randomly.
Pair Corralation between Platinum Investment and Auto Trader
Assuming the 90 days horizon Platinum Investment Management is expected to under-perform the Auto Trader. But the stock apears to be less risky and, when comparing its historical volatility, Platinum Investment Management is 1.48 times less risky than Auto Trader. The stock trades about -0.43 of its potential returns per unit of risk. The Auto Trader Group is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest 1,060 in Auto Trader Group on August 28, 2024 and sell it today you would lose (50.00) from holding Auto Trader Group or give up 4.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Platinum Investment Management vs. Auto Trader Group
Performance |
| Timeline |
| Platinum Investment |
| Auto Trader Group |
Platinum Investment and Auto Trader Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Platinum Investment and Auto Trader
The main advantage of trading using opposite Platinum Investment and Auto Trader positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Platinum Investment 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.| Platinum Investment vs. PICKN PAY STORES | Platinum Investment vs. Qurate Retail Series | Platinum Investment vs. Caseys General Stores | Platinum Investment vs. Retail Estates NV |
| Auto Trader vs. Apple Inc | Auto Trader vs. Apple Inc | Auto Trader vs. Apple Inc | Auto Trader vs. Apple Inc |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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