Correlation Between 778296AC7 and Group 1

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Can any of the company-specific risk be diversified away by investing in both 778296AC7 and Group 1 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 778296AC7 and Group 1 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ROST 47 15 APR 27 and Group 1 Automotive, you can compare the effects of market volatilities on 778296AC7 and Group 1 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 778296AC7 with a short position of Group 1. Check out your portfolio center. Please also check ongoing floating volatility patterns of 778296AC7 and Group 1.

Diversification Opportunities for 778296AC7 and Group 1

-0.15
  Correlation Coefficient

Good diversification

The 3 months correlation between 778296AC7 and Group is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding ROST 47 15 APR 27 and Group 1 Automotive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Group 1 Automotive and 778296AC7 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 ROST 47 15 APR 27 are associated (or correlated) with Group 1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Group 1 Automotive has no effect on the direction of 778296AC7 i.e., 778296AC7 and Group 1 go up and down completely randomly.

Pair Corralation between 778296AC7 and Group 1

Assuming the 90 days trading horizon 778296AC7 is expected to generate 8.56 times less return on investment than Group 1. But when comparing it to its historical volatility, ROST 47 15 APR 27 is 4.06 times less risky than Group 1. It trades about 0.18 of its potential returns per unit of risk. Group 1 Automotive is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest  42,070  in Group 1 Automotive on November 9, 2024 and sell it today you would earn a total of  5,154  from holding Group 1 Automotive or generate 12.25% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy40.0%
ValuesDaily Returns

ROST 47 15 APR 27  vs.  Group 1 Automotive

 Performance 
       Timeline  
ROST 47 15 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days ROST 47 15 APR 27 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 778296AC7 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.
Group 1 Automotive 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Group 1 Automotive are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile basic indicators, Group 1 demonstrated solid returns over the last few months and may actually be approaching a breakup point.

778296AC7 and Group 1 Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with 778296AC7 and Group 1

The main advantage of trading using opposite 778296AC7 and Group 1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 778296AC7 position performs unexpectedly, Group 1 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 Group 1 will offset losses from the drop in Group 1's long position.
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The idea behind ROST 47 15 APR 27 and Group 1 Automotive pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.

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