Correlation Between Carsales and OAKTRSPECLENDNEW
Can any of the company-specific risk be diversified away by investing in both Carsales and OAKTRSPECLENDNEW 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 OAKTRSPECLENDNEW into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carsales and OAKTRSPECLENDNEW, you can compare the effects of market volatilities on Carsales and OAKTRSPECLENDNEW 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 OAKTRSPECLENDNEW. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carsales and OAKTRSPECLENDNEW.
Diversification Opportunities for Carsales and OAKTRSPECLENDNEW
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Carsales and OAKTRSPECLENDNEW is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Carsales and OAKTRSPECLENDNEW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OAKTRSPECLENDNEW 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 OAKTRSPECLENDNEW. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OAKTRSPECLENDNEW has no effect on the direction of Carsales i.e., Carsales and OAKTRSPECLENDNEW go up and down completely randomly.
Pair Corralation between Carsales and OAKTRSPECLENDNEW
Assuming the 90 days trading horizon Carsales is expected to under-perform the OAKTRSPECLENDNEW. In addition to that, Carsales is 1.13 times more volatile than OAKTRSPECLENDNEW. It trades about -0.07 of its total potential returns per unit of risk. OAKTRSPECLENDNEW is currently generating about 0.15 per unit of volatility. If you would invest 1,472 in OAKTRSPECLENDNEW on September 12, 2024 and sell it today you would earn a total of 63.00 from holding OAKTRSPECLENDNEW or generate 4.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Carsales vs. OAKTRSPECLENDNEW
Performance |
| Timeline |
| Carsales |
| OAKTRSPECLENDNEW |
Carsales and OAKTRSPECLENDNEW Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carsales and OAKTRSPECLENDNEW
The main advantage of trading using opposite Carsales and OAKTRSPECLENDNEW positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carsales position performs unexpectedly, OAKTRSPECLENDNEW 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 OAKTRSPECLENDNEW will offset losses from the drop in OAKTRSPECLENDNEW's long position.The idea behind Carsales and OAKTRSPECLENDNEW pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| OAKTRSPECLENDNEW vs. Tradeweb Markets | OAKTRSPECLENDNEW vs. Fast Retailing Co | OAKTRSPECLENDNEW vs. The Trade Desk | OAKTRSPECLENDNEW vs. Carsales |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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