Correlation Between KAR Auction and LondonMetric Property
Can any of the company-specific risk be diversified away by investing in both KAR Auction and LondonMetric Property 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 KAR Auction and LondonMetric Property into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KAR Auction Services and LondonMetric Property Plc, you can compare the effects of market volatilities on KAR Auction and LondonMetric Property 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 KAR Auction with a short position of LondonMetric Property. Check out your portfolio center. Please also check ongoing floating volatility patterns of KAR Auction and LondonMetric Property.
Diversification Opportunities for KAR Auction and LondonMetric Property
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between KAR and LondonMetric is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding KAR Auction Services and LondonMetric Property Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LondonMetric Property Plc and KAR Auction 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 KAR Auction Services are associated (or correlated) with LondonMetric Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LondonMetric Property Plc has no effect on the direction of KAR Auction i.e., KAR Auction and LondonMetric Property go up and down completely randomly.
Pair Corralation between KAR Auction and LondonMetric Property
Assuming the 90 days horizon KAR Auction Services is expected to generate 0.64 times more return on investment than LondonMetric Property. However, KAR Auction Services is 1.57 times less risky than LondonMetric Property. It trades about 0.15 of its potential returns per unit of risk. LondonMetric Property Plc is currently generating about 0.02 per unit of risk. If you would invest 1,900 in KAR Auction Services on November 2, 2024 and sell it today you would earn a total of 70.00 from holding KAR Auction Services or generate 3.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KAR Auction Services vs. LondonMetric Property Plc
Performance |
| Timeline |
| KAR Auction Services |
| LondonMetric Property Plc |
KAR Auction and LondonMetric Property Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KAR Auction and LondonMetric Property
The main advantage of trading using opposite KAR Auction and LondonMetric Property positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KAR Auction position performs unexpectedly, LondonMetric Property 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 LondonMetric Property will offset losses from the drop in LondonMetric Property's long position.| KAR Auction vs. Chiba Bank | KAR Auction vs. Warner Music Group | KAR Auction vs. Canadian Utilities Limited | KAR Auction vs. Direct Line Insurance |
| LondonMetric Property vs. Xenia Hotels Resorts | LondonMetric Property vs. MAVEN WIRELESS SWEDEN | LondonMetric Property vs. MHP Hotel AG | LondonMetric Property vs. NH HOTEL GROUP |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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