Correlation Between CARSALES and FIRST SAVINGS
Can any of the company-specific risk be diversified away by investing in both CARSALES and FIRST SAVINGS 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 CARSALES and FIRST SAVINGS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CARSALESCOM and FIRST SAVINGS FINL, you can compare the effects of market volatilities on CARSALES and FIRST SAVINGS 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 CARSALES with a short position of FIRST SAVINGS. Check out your portfolio center. Please also check ongoing floating volatility patterns of CARSALES and FIRST SAVINGS.
Diversification Opportunities for CARSALES and FIRST SAVINGS
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CARSALES and FIRST is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding CARSALESCOM and FIRST SAVINGS FINL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIRST SAVINGS FINL and CARSALES 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 CARSALESCOM are associated (or correlated) with FIRST SAVINGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FIRST SAVINGS FINL has no effect on the direction of CARSALES i.e., CARSALES and FIRST SAVINGS go up and down completely randomly.
Pair Corralation between CARSALES and FIRST SAVINGS
Assuming the 90 days trading horizon CARSALESCOM is expected to generate 0.74 times more return on investment than FIRST SAVINGS. However, CARSALESCOM is 1.35 times less risky than FIRST SAVINGS. It trades about 0.07 of its potential returns per unit of risk. FIRST SAVINGS FINL is currently generating about 0.04 per unit of risk. If you would invest 1,393 in CARSALESCOM on November 7, 2024 and sell it today you would earn a total of 987.00 from holding CARSALESCOM or generate 70.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CARSALESCOM vs. FIRST SAVINGS FINL
Performance |
| Timeline |
| CARSALESCOM |
| FIRST SAVINGS FINL |
CARSALES and FIRST SAVINGS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CARSALES and FIRST SAVINGS
The main advantage of trading using opposite CARSALES and FIRST SAVINGS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CARSALES position performs unexpectedly, FIRST SAVINGS 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 FIRST SAVINGS will offset losses from the drop in FIRST SAVINGS's long position.| CARSALES vs. EPSILON HEALTHCARE LTD | CARSALES vs. CEOTRONICS | CARSALES vs. Materialise NV | CARSALES vs. CARDINAL HEALTH |
| FIRST SAVINGS vs. Sunny Optical Technology | FIRST SAVINGS vs. Marie Brizard Wine | FIRST SAVINGS vs. Amkor Technology | FIRST SAVINGS vs. Treasury Wine Estates |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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