Correlation Between KAR Auction and SPAREBK 1
Can any of the company-specific risk be diversified away by investing in both KAR Auction and SPAREBK 1 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 SPAREBK 1 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 SPAREBK 1 NORD NORGE, you can compare the effects of market volatilities on KAR Auction and SPAREBK 1 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 SPAREBK 1. Check out your portfolio center. Please also check ongoing floating volatility patterns of KAR Auction and SPAREBK 1.
Diversification Opportunities for KAR Auction and SPAREBK 1
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KAR and SPAREBK is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding KAR Auction Services and SPAREBK 1 NORD NORGE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPAREBK 1 NORD 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 SPAREBK 1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPAREBK 1 NORD has no effect on the direction of KAR Auction i.e., KAR Auction and SPAREBK 1 go up and down completely randomly.
Pair Corralation between KAR Auction and SPAREBK 1
Assuming the 90 days horizon KAR Auction is expected to generate 1.89 times less return on investment than SPAREBK 1. In addition to that, KAR Auction is 1.06 times more volatile than SPAREBK 1 NORD NORGE. It trades about 0.15 of its total potential returns per unit of risk. SPAREBK 1 NORD NORGE is currently generating about 0.31 per unit of volatility. If you would invest 1,033 in SPAREBK 1 NORD NORGE on November 2, 2024 and sell it today you would earn a total of 71.00 from holding SPAREBK 1 NORD NORGE or generate 6.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
KAR Auction Services vs. SPAREBK 1 NORD NORGE
Performance |
| Timeline |
| KAR Auction Services |
| SPAREBK 1 NORD |
KAR Auction and SPAREBK 1 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KAR Auction and SPAREBK 1
The main advantage of trading using opposite KAR Auction and SPAREBK 1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KAR Auction position performs unexpectedly, SPAREBK 1 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 SPAREBK 1 will offset losses from the drop in SPAREBK 1'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 |
| SPAREBK 1 vs. MCEWEN MINING INC | SPAREBK 1 vs. FIREWEED METALS P | SPAREBK 1 vs. SERI INDUSTRIAL EO | SPAREBK 1 vs. Zijin Mining 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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