Correlation Between Carsales and BRIT AMER
Can any of the company-specific risk be diversified away by investing in both Carsales and BRIT AMER 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 BRIT AMER into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CarsalesCom and BRIT AMER TOBACCO, you can compare the effects of market volatilities on Carsales and BRIT AMER 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 BRIT AMER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carsales and BRIT AMER.
Diversification Opportunities for Carsales and BRIT AMER
Very weak diversification
The 3 months correlation between Carsales and BRIT is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding CarsalesCom and BRIT AMER TOBACCO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRIT AMER TOBACCO 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 BRIT AMER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRIT AMER TOBACCO has no effect on the direction of Carsales i.e., Carsales and BRIT AMER go up and down completely randomly.
Pair Corralation between Carsales and BRIT AMER
Assuming the 90 days horizon CarsalesCom is expected to generate 1.37 times more return on investment than BRIT AMER. However, Carsales is 1.37 times more volatile than BRIT AMER TOBACCO. It trades about 0.1 of its potential returns per unit of risk. BRIT AMER TOBACCO is currently generating about 0.02 per unit of risk. If you would invest 1,282 in CarsalesCom on September 4, 2024 and sell it today you would earn a total of 1,278 from holding CarsalesCom or generate 99.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CarsalesCom vs. BRIT AMER TOBACCO
Performance |
| Timeline |
| CarsalesCom |
| BRIT AMER TOBACCO |
Carsales and BRIT AMER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carsales and BRIT AMER
The main advantage of trading using opposite Carsales and BRIT AMER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carsales position performs unexpectedly, BRIT AMER 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 BRIT AMER will offset losses from the drop in BRIT AMER's long position.| Carsales vs. BRIT AMER TOBACCO | Carsales vs. Japan Tobacco | Carsales vs. MICRONIC MYDATA | Carsales vs. FUYO GENERAL LEASE |
| BRIT AMER vs. Thai Beverage Public | BRIT AMER vs. ITALIAN WINE BRANDS | BRIT AMER vs. VIVA WINE GROUP | BRIT AMER vs. National Retail Properties |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance |