Correlation Between State Bank and Auto Trader
Can any of the company-specific risk be diversified away by investing in both State Bank 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 State Bank and Auto Trader into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between State Bank of and Auto Trader Group, you can compare the effects of market volatilities on State Bank 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 State Bank with a short position of Auto Trader. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Bank and Auto Trader.
Diversification Opportunities for State Bank and Auto Trader
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between State and Auto is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding State Bank of 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 State Bank 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 State Bank of 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 State Bank i.e., State Bank and Auto Trader go up and down completely randomly.
Pair Corralation between State Bank and Auto Trader
Assuming the 90 days trading horizon State Bank of is expected to generate 0.97 times more return on investment than Auto Trader. However, State Bank of is 1.04 times less risky than Auto Trader. It trades about -0.02 of its potential returns per unit of risk. Auto Trader Group is currently generating about -0.17 per unit of risk. If you would invest 9,350 in State Bank of on August 24, 2024 and sell it today you would lose (120.00) from holding State Bank of or give up 1.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
State Bank of vs. Auto Trader Group
Performance |
| Timeline |
| State Bank |
| Auto Trader Group |
State Bank and Auto Trader Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Bank and Auto Trader
The main advantage of trading using opposite State Bank and Auto Trader positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Bank 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.| State Bank vs. Broadridge Financial Solutions | State Bank vs. JB Hunt Transport | State Bank vs. Silvercorp Metals | State Bank vs. EVS Broadcast Equipment |
| Auto Trader vs. Volkswagen AG | Auto Trader vs. United Parcel Service | Auto Trader vs. Jardine Matheson Holdings | Auto Trader vs. Neometals |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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