Correlation Between CarsalesCom and ShotSpotter
Can any of the company-specific risk be diversified away by investing in both CarsalesCom and ShotSpotter 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 ShotSpotter into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CarsalesCom and ShotSpotter, you can compare the effects of market volatilities on CarsalesCom and ShotSpotter 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 ShotSpotter. Check out your portfolio center. Please also check ongoing floating volatility patterns of CarsalesCom and ShotSpotter.
Diversification Opportunities for CarsalesCom and ShotSpotter
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between CarsalesCom and ShotSpotter is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding CarsalesCom and ShotSpotter in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ShotSpotter 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 ShotSpotter. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ShotSpotter has no effect on the direction of CarsalesCom i.e., CarsalesCom and ShotSpotter go up and down completely randomly.
Pair Corralation between CarsalesCom and ShotSpotter
Assuming the 90 days horizon CarsalesCom is expected to generate 1.88 times less return on investment than ShotSpotter. But when comparing it to its historical volatility, CarsalesCom is 4.56 times less risky than ShotSpotter. It trades about 0.48 of its potential returns per unit of risk. ShotSpotter is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 1,010 in ShotSpotter on August 31, 2024 and sell it today you would earn a total of 260.00 from holding ShotSpotter or generate 25.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
CarsalesCom vs. ShotSpotter
Performance |
| Timeline |
| CarsalesCom |
| ShotSpotter |
CarsalesCom and ShotSpotter Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CarsalesCom and ShotSpotter
The main advantage of trading using opposite CarsalesCom and ShotSpotter positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CarsalesCom position performs unexpectedly, ShotSpotter 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 ShotSpotter will offset losses from the drop in ShotSpotter's long position.| CarsalesCom vs. AEGEAN AIRLINES | CarsalesCom vs. CompuGroup Medical SE | CarsalesCom vs. IMAGIN MEDICAL INC | CarsalesCom vs. Nok Airlines PCL |
| ShotSpotter vs. BJs Wholesale Club | ShotSpotter vs. PICKN PAY STORES | ShotSpotter vs. National Retail Properties | ShotSpotter vs. JIAHUA STORES |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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