Correlation Between Carsales and Zumtobel Group
Can any of the company-specific risk be diversified away by investing in both Carsales and Zumtobel Group 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 Zumtobel Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carsales and Zumtobel Group AG, you can compare the effects of market volatilities on Carsales and Zumtobel Group 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 Zumtobel Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carsales and Zumtobel Group.
Diversification Opportunities for Carsales and Zumtobel Group
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Carsales and Zumtobel is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Carsales and Zumtobel Group AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zumtobel Group AG 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 Zumtobel Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zumtobel Group AG has no effect on the direction of Carsales i.e., Carsales and Zumtobel Group go up and down completely randomly.
Pair Corralation between Carsales and Zumtobel Group
Assuming the 90 days trading horizon Carsales is expected to under-perform the Zumtobel Group. But the stock apears to be less risky and, when comparing its historical volatility, Carsales is 1.42 times less risky than Zumtobel Group. The stock trades about -0.43 of its potential returns per unit of risk. The Zumtobel Group AG is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest 508.00 in Zumtobel Group AG on October 7, 2024 and sell it today you would lose (22.00) from holding Zumtobel Group AG or give up 4.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Carsales vs. Zumtobel Group AG
Performance |
| Timeline |
| Carsales |
| Zumtobel Group AG |
Carsales and Zumtobel Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carsales and Zumtobel Group
The main advantage of trading using opposite Carsales and Zumtobel Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carsales position performs unexpectedly, Zumtobel Group 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 Zumtobel Group will offset losses from the drop in Zumtobel Group's long position.| Carsales vs. Ryanair Holdings plc | Carsales vs. Pentair plc | Carsales vs. Air New Zealand | Carsales vs. Meli Hotels International |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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