Correlation Between CARSALES and Packagingof America
Can any of the company-specific risk be diversified away by investing in both CARSALES and Packagingof America 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 Packagingof America into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CARSALESCOM and Packaging of, you can compare the effects of market volatilities on CARSALES and Packagingof America 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 Packagingof America. Check out your portfolio center. Please also check ongoing floating volatility patterns of CARSALES and Packagingof America.
Diversification Opportunities for CARSALES and Packagingof America
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between CARSALES and Packagingof is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding CARSALESCOM and Packaging of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Packagingof America 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 Packagingof America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Packagingof America has no effect on the direction of CARSALES i.e., CARSALES and Packagingof America go up and down completely randomly.
Pair Corralation between CARSALES and Packagingof America
Assuming the 90 days trading horizon CARSALESCOM is expected to generate 0.86 times more return on investment than Packagingof America. However, CARSALESCOM is 1.17 times less risky than Packagingof America. It trades about 0.47 of its potential returns per unit of risk. Packaging of is currently generating about 0.31 per unit of risk. If you would invest 2,240 in CARSALESCOM on September 2, 2024 and sell it today you would earn a total of 320.00 from holding CARSALESCOM or generate 14.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
CARSALESCOM vs. Packaging of
Performance |
| Timeline |
| CARSALESCOM |
| Packagingof America |
CARSALES and Packagingof America Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CARSALES and Packagingof America
The main advantage of trading using opposite CARSALES and Packagingof America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CARSALES position performs unexpectedly, Packagingof America 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 Packagingof America will offset losses from the drop in Packagingof America's long position.| CARSALES vs. ASURE SOFTWARE | CARSALES vs. Austevoll Seafood ASA | CARSALES vs. INDOFOOD AGRI RES | CARSALES vs. Magic Software Enterprises |
| Packagingof America vs. MTI WIRELESS EDGE | Packagingof America vs. Grupo Carso SAB | Packagingof America vs. Charter Communications | Packagingof America 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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