Correlation Between Carsales and BORR DRILLING
Can any of the company-specific risk be diversified away by investing in both Carsales and BORR DRILLING 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 BORR DRILLING into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CarsalesCom and BORR DRILLING NEW, you can compare the effects of market volatilities on Carsales and BORR DRILLING 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 BORR DRILLING. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carsales and BORR DRILLING.
Diversification Opportunities for Carsales and BORR DRILLING
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Carsales and BORR is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding CarsalesCom and BORR DRILLING NEW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BORR DRILLING NEW 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 BORR DRILLING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BORR DRILLING NEW has no effect on the direction of Carsales i.e., Carsales and BORR DRILLING go up and down completely randomly.
Pair Corralation between Carsales and BORR DRILLING
Assuming the 90 days horizon CarsalesCom is expected to generate 0.5 times more return on investment than BORR DRILLING. However, CarsalesCom is 1.98 times less risky than BORR DRILLING. It trades about 0.09 of its potential returns per unit of risk. BORR DRILLING NEW is currently generating about 0.02 per unit of risk. If you would invest 1,282 in CarsalesCom on August 28, 2024 and sell it today you would earn a total of 1,198 from holding CarsalesCom or generate 93.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CarsalesCom vs. BORR DRILLING NEW
Performance |
| Timeline |
| CarsalesCom |
| BORR DRILLING NEW |
Carsales and BORR DRILLING Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carsales and BORR DRILLING
The main advantage of trading using opposite Carsales and BORR DRILLING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carsales position performs unexpectedly, BORR DRILLING 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 BORR DRILLING will offset losses from the drop in BORR DRILLING's long position.| Carsales vs. Grupo Carso SAB | Carsales vs. COMMERCIAL VEHICLE | Carsales vs. ITALIAN WINE BRANDS | Carsales vs. BLUESCOPE STEEL |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
Other Complementary Tools
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |