Correlation Between Carsales and Stewart Information
Can any of the company-specific risk be diversified away by investing in both Carsales and Stewart Information 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 Stewart Information into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CarsalesCom and Stewart Information Services, you can compare the effects of market volatilities on Carsales and Stewart Information 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 Stewart Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carsales and Stewart Information.
Diversification Opportunities for Carsales and Stewart Information
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Carsales and Stewart is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding CarsalesCom and Stewart Information Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stewart Information 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 Stewart Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stewart Information has no effect on the direction of Carsales i.e., Carsales and Stewart Information go up and down completely randomly.
Pair Corralation between Carsales and Stewart Information
Assuming the 90 days horizon CarsalesCom is expected to generate 0.78 times more return on investment than Stewart Information. However, CarsalesCom is 1.28 times less risky than Stewart Information. It trades about -0.1 of its potential returns per unit of risk. Stewart Information Services is currently generating about -0.18 per unit of risk. If you would invest 2,560 in CarsalesCom on November 3, 2024 and sell it today you would lose (160.00) from holding CarsalesCom or give up 6.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CarsalesCom vs. Stewart Information Services
Performance |
| Timeline |
| CarsalesCom |
| Stewart Information |
Carsales and Stewart Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carsales and Stewart Information
The main advantage of trading using opposite Carsales and Stewart Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carsales position performs unexpectedly, Stewart Information 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 Stewart Information will offset losses from the drop in Stewart Information's long position.| Carsales vs. The Yokohama Rubber | Carsales vs. The Boston Beer | Carsales vs. Suntory Beverage Food | Carsales vs. Tsingtao Brewery |
| Stewart Information vs. URBAN OUTFITTERS | Stewart Information vs. Eidesvik Offshore ASA | Stewart Information vs. Transport International Holdings | Stewart Information vs. Broadcom |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
Other Complementary Tools
| 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 | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios |