Correlation Between CARSALES and Haleon PLC
Can any of the company-specific risk be diversified away by investing in both CARSALES and Haleon PLC 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 Haleon PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CARSALESCOM and Haleon PLC, you can compare the effects of market volatilities on CARSALES and Haleon PLC 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 Haleon PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of CARSALES and Haleon PLC.
Diversification Opportunities for CARSALES and Haleon PLC
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CARSALES and Haleon is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding CARSALESCOM and Haleon PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Haleon PLC 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 Haleon PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Haleon PLC has no effect on the direction of CARSALES i.e., CARSALES and Haleon PLC go up and down completely randomly.
Pair Corralation between CARSALES and Haleon PLC
Assuming the 90 days trading horizon CARSALESCOM is expected to generate 0.98 times more return on investment than Haleon PLC. However, CARSALESCOM is 1.02 times less risky than Haleon PLC. It trades about 0.09 of its potential returns per unit of risk. Haleon PLC is currently generating about 0.04 per unit of risk. If you would invest 1,292 in CARSALESCOM on September 3, 2024 and sell it today you would earn a total of 1,268 from holding CARSALESCOM or generate 98.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CARSALESCOM vs. Haleon PLC
Performance |
| Timeline |
| CARSALESCOM |
| Haleon PLC |
CARSALES and Haleon PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CARSALES and Haleon PLC
The main advantage of trading using opposite CARSALES and Haleon PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CARSALES position performs unexpectedly, Haleon PLC 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 Haleon PLC will offset losses from the drop in Haleon PLC's long position.| CARSALES vs. COMBA TELECOM SYST | CARSALES vs. SENECA FOODS A | CARSALES vs. Entravision Communications | CARSALES vs. JJ SNACK FOODS |
| Haleon PLC vs. CARSALESCOM | Haleon PLC vs. WILLIS LEASE FIN | Haleon PLC vs. MUTUIONLINE | Haleon PLC vs. SCANSOURCE |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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