Correlation Between Seraphim Space and Auto Trader
Can any of the company-specific risk be diversified away by investing in both Seraphim Space 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 Seraphim Space and Auto Trader into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seraphim Space Investment and Auto Trader Group, you can compare the effects of market volatilities on Seraphim Space 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 Seraphim Space with a short position of Auto Trader. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seraphim Space and Auto Trader.
Diversification Opportunities for Seraphim Space and Auto Trader
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Seraphim and Auto is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Seraphim Space Investment 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 Seraphim Space 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 Seraphim Space Investment 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 Seraphim Space i.e., Seraphim Space and Auto Trader go up and down completely randomly.
Pair Corralation between Seraphim Space and Auto Trader
Assuming the 90 days trading horizon Seraphim Space Investment is expected to under-perform the Auto Trader. In addition to that, Seraphim Space is 1.81 times more volatile than Auto Trader Group. It trades about -0.39 of its total potential returns per unit of risk. Auto Trader Group is currently generating about -0.32 per unit of volatility. If you would invest 82,315 in Auto Trader Group on October 10, 2024 and sell it today you would lose (3,515) from holding Auto Trader Group or give up 4.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seraphim Space Investment vs. Auto Trader Group
Performance |
| Timeline |
| Seraphim Space Investment |
| Auto Trader Group |
Seraphim Space and Auto Trader Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seraphim Space and Auto Trader
The main advantage of trading using opposite Seraphim Space and Auto Trader positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seraphim Space 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.| Seraphim Space vs. SupplyMe Capital PLC | Seraphim Space vs. SM Energy Co | Seraphim Space vs. FuelCell Energy | Seraphim Space vs. Grand Vision Media |
| Auto Trader vs. Polar Capital Technology | Auto Trader vs. Roper Technologies | Auto Trader vs. Take Two Interactive Software | Auto Trader vs. Norwegian Air Shuttle |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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