Correlation Between STORE ELECTRONIC and Carsales
Can any of the company-specific risk be diversified away by investing in both STORE ELECTRONIC 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 STORE ELECTRONIC and Carsales into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STORE ELECTRONIC and Carsales, you can compare the effects of market volatilities on STORE ELECTRONIC 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 STORE ELECTRONIC with a short position of Carsales. Check out your portfolio center. Please also check ongoing floating volatility patterns of STORE ELECTRONIC and Carsales.
Diversification Opportunities for STORE ELECTRONIC and Carsales
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between STORE and Carsales is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding STORE ELECTRONIC and Carsales in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carsales and STORE ELECTRONIC 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 STORE ELECTRONIC 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 STORE ELECTRONIC i.e., STORE ELECTRONIC and Carsales go up and down completely randomly.
Pair Corralation between STORE ELECTRONIC and Carsales
Assuming the 90 days trading horizon STORE ELECTRONIC is expected to generate 1.52 times more return on investment than Carsales. However, STORE ELECTRONIC is 1.52 times more volatile than Carsales. It trades about 0.13 of its potential returns per unit of risk. Carsales is currently generating about 0.03 per unit of risk. If you would invest 13,930 in STORE ELECTRONIC on November 6, 2024 and sell it today you would earn a total of 2,950 from holding STORE ELECTRONIC or generate 21.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
STORE ELECTRONIC vs. Carsales
Performance |
| Timeline |
| STORE ELECTRONIC |
| Carsales |
STORE ELECTRONIC and Carsales Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STORE ELECTRONIC and Carsales
The main advantage of trading using opposite STORE ELECTRONIC and Carsales positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STORE ELECTRONIC 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.| STORE ELECTRONIC vs. MAVEN WIRELESS SWEDEN | STORE ELECTRONIC vs. SEI INVESTMENTS | STORE ELECTRONIC vs. Air Lease | STORE ELECTRONIC vs. CDL INVESTMENT |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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