Correlation Between Transportadora and Auto Trader
Can any of the company-specific risk be diversified away by investing in both Transportadora 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 Transportadora and Auto Trader into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transportadora de Gas and Auto Trader Group, you can compare the effects of market volatilities on Transportadora 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 Transportadora with a short position of Auto Trader. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transportadora and Auto Trader.
Diversification Opportunities for Transportadora and Auto Trader
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Transportadora and Auto is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Transportadora de Gas 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 Transportadora 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 Transportadora de Gas 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 Transportadora i.e., Transportadora and Auto Trader go up and down completely randomly.
Pair Corralation between Transportadora and Auto Trader
Assuming the 90 days trading horizon Transportadora de Gas is expected to generate 2.48 times more return on investment than Auto Trader. However, Transportadora is 2.48 times more volatile than Auto Trader Group. It trades about 0.26 of its potential returns per unit of risk. Auto Trader Group is currently generating about -0.12 per unit of risk. If you would invest 1,780 in Transportadora de Gas on August 25, 2024 and sell it today you would earn a total of 960.00 from holding Transportadora de Gas or generate 53.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transportadora de Gas vs. Auto Trader Group
Performance |
| Timeline |
| Transportadora de Gas |
| Auto Trader Group |
Transportadora and Auto Trader Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transportadora and Auto Trader
The main advantage of trading using opposite Transportadora and Auto Trader positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transportadora 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.| Transportadora vs. Apple Inc | Transportadora vs. Apple Inc | Transportadora vs. Apple Inc | Transportadora vs. Apple Inc |
| 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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