Correlation Between W R and CARSALES
Can any of the company-specific risk be diversified away by investing in both W R and CARSALES 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 W R and CARSALES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between W R Berkley and CARSALESCOM, you can compare the effects of market volatilities on W R and CARSALES 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 W R with a short position of CARSALES. Check out your portfolio center. Please also check ongoing floating volatility patterns of W R and CARSALES.
Diversification Opportunities for W R and CARSALES
Excellent diversification
The 3 months correlation between WR1 and CARSALES is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding W R Berkley and CARSALESCOM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CARSALESCOM and W R 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 W R Berkley are associated (or correlated) with CARSALES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CARSALESCOM has no effect on the direction of W R i.e., W R and CARSALES go up and down completely randomly.
Pair Corralation between W R and CARSALES
Assuming the 90 days horizon W R Berkley is expected to generate 0.98 times more return on investment than CARSALES. However, W R Berkley is 1.02 times less risky than CARSALES. It trades about 0.09 of its potential returns per unit of risk. CARSALESCOM is currently generating about -0.1 per unit of risk. If you would invest 5,638 in W R Berkley on January 12, 2025 and sell it today you would earn a total of 292.00 from holding W R Berkley or generate 5.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
W R Berkley vs. CARSALESCOM
Performance |
| Timeline |
| W R Berkley |
| CARSALESCOM |
W R and CARSALES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with W R and CARSALES
The main advantage of trading using opposite W R and CARSALES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if W R position performs unexpectedly, CARSALES 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 CARSALES will offset losses from the drop in CARSALES's long position.The idea behind W R Berkley and CARSALESCOM 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.| CARSALES vs. Guangdong Investment Limited | CARSALES vs. Diversified Healthcare Trust | CARSALES vs. Scottish Mortgage Investment | CARSALES vs. WisdomTree Investments |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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