Correlation Between Carsales and ITALIAN WINE
Can any of the company-specific risk be diversified away by investing in both Carsales and ITALIAN WINE 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 ITALIAN WINE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CarsalesCom and ITALIAN WINE BRANDS, you can compare the effects of market volatilities on Carsales and ITALIAN WINE 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 ITALIAN WINE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carsales and ITALIAN WINE.
Diversification Opportunities for Carsales and ITALIAN WINE
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Carsales and ITALIAN is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding CarsalesCom and ITALIAN WINE BRANDS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITALIAN WINE BRANDS 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 ITALIAN WINE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITALIAN WINE BRANDS has no effect on the direction of Carsales i.e., Carsales and ITALIAN WINE go up and down completely randomly.
Pair Corralation between Carsales and ITALIAN WINE
Assuming the 90 days horizon CarsalesCom is expected to generate 0.71 times more return on investment than ITALIAN WINE. However, CarsalesCom is 1.42 times less risky than ITALIAN WINE. It trades about 0.29 of its potential returns per unit of risk. ITALIAN WINE BRANDS is currently generating about -0.04 per unit of risk. If you would invest 2,160 in CarsalesCom on November 3, 2024 and sell it today you would earn a total of 220.00 from holding CarsalesCom or generate 10.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
CarsalesCom vs. ITALIAN WINE BRANDS
Performance |
| Timeline |
| CarsalesCom |
| ITALIAN WINE BRANDS |
Carsales and ITALIAN WINE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carsales and ITALIAN WINE
The main advantage of trading using opposite Carsales and ITALIAN WINE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carsales position performs unexpectedly, ITALIAN WINE 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 ITALIAN WINE will offset losses from the drop in ITALIAN WINE's long position.| Carsales vs. T Mobile | Carsales vs. Zoom Video Communications | Carsales vs. SPARTAN STORES | Carsales vs. ecotel communication ag |
| ITALIAN WINE vs. MGP Ingredients | ITALIAN WINE vs. NAKED WINES PLC | ITALIAN WINE vs. CHINA TONTINE WINES | ITALIAN WINE vs. Superior Plus Corp |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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