Correlation Between Stag Industrial and Carsales
Can any of the company-specific risk be diversified away by investing in both Stag Industrial 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 Stag Industrial and Carsales into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stag Industrial and CarsalesCom, you can compare the effects of market volatilities on Stag Industrial 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 Stag Industrial with a short position of Carsales. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stag Industrial and Carsales.
Diversification Opportunities for Stag Industrial and Carsales
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Stag and Carsales is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Stag Industrial and CarsalesCom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CarsalesCom and Stag Industrial 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 Stag Industrial 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 CarsalesCom has no effect on the direction of Stag Industrial i.e., Stag Industrial and Carsales go up and down completely randomly.
Pair Corralation between Stag Industrial and Carsales
Assuming the 90 days trading horizon Stag Industrial is expected to generate 4.26 times less return on investment than Carsales. But when comparing it to its historical volatility, Stag Industrial is 1.55 times less risky than Carsales. It trades about 0.1 of its potential returns per unit of risk. CarsalesCom is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 2,200 in CarsalesCom on November 4, 2024 and sell it today you would earn a total of 200.00 from holding CarsalesCom or generate 9.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stag Industrial vs. CarsalesCom
Performance |
| Timeline |
| Stag Industrial |
| CarsalesCom |
Stag Industrial and Carsales Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stag Industrial and Carsales
The main advantage of trading using opposite Stag Industrial and Carsales positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stag Industrial 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.| Stag Industrial vs. ON SEMICONDUCTOR | Stag Industrial vs. TRI CHEMICAL LABORATINC | Stag Industrial vs. TOREX SEMICONDUCTOR LTD | Stag Industrial vs. X FAB Silicon Foundries |
| Carsales vs. China Railway Construction | Carsales vs. Nordic Semiconductor ASA | Carsales vs. MagnaChip Semiconductor Corp | Carsales vs. ON SEMICONDUCTOR |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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