Correlation Between Carsales and STORE ELECTRONIC
Can any of the company-specific risk be diversified away by investing in both Carsales and STORE ELECTRONIC 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 STORE ELECTRONIC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carsales and STORE ELECTRONIC, you can compare the effects of market volatilities on Carsales and STORE ELECTRONIC 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 STORE ELECTRONIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carsales and STORE ELECTRONIC.
Diversification Opportunities for Carsales and STORE ELECTRONIC
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Carsales and STORE is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Carsales and STORE ELECTRONIC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STORE ELECTRONIC 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 STORE ELECTRONIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STORE ELECTRONIC has no effect on the direction of Carsales i.e., Carsales and STORE ELECTRONIC go up and down completely randomly.
Pair Corralation between Carsales and STORE ELECTRONIC
Assuming the 90 days trading horizon Carsales is expected to generate 6.17 times less return on investment than STORE ELECTRONIC. But when comparing it to its historical volatility, Carsales is 1.52 times less risky than STORE ELECTRONIC. It trades about 0.03 of its potential returns per unit of risk. STORE ELECTRONIC is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 13,930 in STORE ELECTRONIC on November 6, 2024 and sell it today you would earn a total of 2,950 from holding STORE ELECTRONIC or generate 21.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Carsales vs. STORE ELECTRONIC
Performance |
| Timeline |
| Carsales |
| STORE ELECTRONIC |
Carsales and STORE ELECTRONIC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carsales and STORE ELECTRONIC
The main advantage of trading using opposite Carsales and STORE ELECTRONIC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carsales position performs unexpectedly, STORE ELECTRONIC 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 STORE ELECTRONIC will offset losses from the drop in STORE ELECTRONIC's long position.| Carsales vs. PLANT VEDA FOODS | Carsales vs. Molson Coors Beverage | Carsales vs. Moneysupermarket Group PLC | Carsales vs. VARIOUS EATERIES LS |
| STORE ELECTRONIC vs. MAVEN WIRELESS SWEDEN | STORE ELECTRONIC vs. SEI INVESTMENTS | STORE ELECTRONIC vs. Air Lease | STORE ELECTRONIC vs. CDL INVESTMENT |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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