Correlation Between Carsales and Air Transport
Can any of the company-specific risk be diversified away by investing in both Carsales and Air Transport 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 Air Transport into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carsales and Air Transport Services, you can compare the effects of market volatilities on Carsales and Air Transport 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 Air Transport. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carsales and Air Transport.
Diversification Opportunities for Carsales and Air Transport
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Carsales and Air is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Carsales and Air Transport Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Transport Services 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 Carsales are associated (or correlated) with Air Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Transport Services has no effect on the direction of Carsales i.e., Carsales and Air Transport go up and down completely randomly.
Pair Corralation between Carsales and Air Transport
Assuming the 90 days trading horizon Carsales is expected to generate 3.87 times more return on investment than Air Transport. However, Carsales is 3.87 times more volatile than Air Transport Services. It trades about 0.2 of its potential returns per unit of risk. Air Transport Services is currently generating about 0.15 per unit of risk. If you would invest 2,200 in Carsales on November 4, 2024 and sell it today you would earn a total of 220.00 from holding Carsales or generate 10.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Carsales vs. Air Transport Services
Performance |
| Timeline |
| Carsales |
| Air Transport Services |
Carsales and Air Transport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carsales and Air Transport
The main advantage of trading using opposite Carsales and Air Transport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carsales position performs unexpectedly, Air Transport 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 Air Transport will offset losses from the drop in Air Transport's long position.| Carsales vs. Major Drilling Group | Carsales vs. Information Services International Dentsu | Carsales vs. Automatic Data Processing | Carsales vs. FIRST SHIP LEASE |
| Air Transport vs. NEWELL RUBBERMAID | Air Transport vs. Summit Materials | Air Transport vs. Plastic Omnium | Air Transport vs. BW OFFSHORE LTD |
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 CEOs Directory module to screen CEOs from public companies around the world.
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