Correlation Between CARSALESCOM and Metro AG
Can any of the company-specific risk be diversified away by investing in both CARSALESCOM and Metro AG 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 CARSALESCOM and Metro AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CARSALESCOM and Metro AG, you can compare the effects of market volatilities on CARSALESCOM and Metro AG 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 CARSALESCOM with a short position of Metro AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of CARSALESCOM and Metro AG.
Diversification Opportunities for CARSALESCOM and Metro AG
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between CARSALESCOM and Metro is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding CARSALESCOM and Metro AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metro AG and CARSALESCOM 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 Metro AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metro AG has no effect on the direction of CARSALESCOM i.e., CARSALESCOM and Metro AG go up and down completely randomly.
Pair Corralation between CARSALESCOM and Metro AG
Assuming the 90 days trading horizon CARSALESCOM is expected to generate 0.82 times more return on investment than Metro AG. However, CARSALESCOM is 1.22 times less risky than Metro AG. It trades about 0.07 of its potential returns per unit of risk. Metro AG is currently generating about -0.07 per unit of risk. If you would invest 1,375 in CARSALESCOM on October 14, 2024 and sell it today you would earn a total of 885.00 from holding CARSALESCOM or generate 64.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CARSALESCOM vs. Metro AG
Performance |
| Timeline |
| CARSALESCOM |
| Metro AG |
CARSALESCOM and Metro AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CARSALESCOM and Metro AG
The main advantage of trading using opposite CARSALESCOM and Metro AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CARSALESCOM position performs unexpectedly, Metro AG 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 Metro AG will offset losses from the drop in Metro AG's long position.| CARSALESCOM vs. Tianjin Capital Environmental | CARSALESCOM vs. VIRGIN WINES UK | CARSALESCOM vs. Yuexiu Transport Infrastructure | CARSALESCOM vs. Mount Gibson Iron |
| Metro AG vs. COPLAND ROAD CAPITAL | Metro AG vs. Gaztransport Technigaz SA | Metro AG vs. GOLD ROAD RES | Metro AG vs. CARSALESCOM |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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