Correlation Between AUTO TRADER and National Retail

Can any of the company-specific risk be diversified away by investing in both AUTO TRADER and National Retail 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 AUTO TRADER and National Retail into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AUTO TRADER ADR and National Retail Properties, you can compare the effects of market volatilities on AUTO TRADER and National Retail 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 AUTO TRADER with a short position of National Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of AUTO TRADER and National Retail.

Diversification Opportunities for AUTO TRADER and National Retail

0.24

Correlation Coefficient

AUTO TRADER  National Retail

Modest diversification

The 3 months correlation between AUTO and National is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding AUTO TRADER ADR and National Retail Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Retail Prop and AUTO TRADER 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 AUTO TRADER ADR are associated (or correlated) with National Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Retail Prop has no effect on the direction of AUTO TRADER i.e., AUTO TRADER and National Retail go up and down completely randomly.

Pair Corralation between AUTO TRADER and National Retail

Assuming the 90 days trading horizon AUTO TRADER ADR is expected to generate 1.95 times more return on investment than National Retail. However, AUTO TRADER is 1.95 times more volatile than National Retail Properties. It trades about 0.05 of its potential returns per unit of risk. National Retail Properties is currently generating about 0.05 per unit of risk. If you would invest  210.00  in AUTO TRADER ADR on April 20, 2025 and sell it today you would earn a total of  12.00  from holding AUTO TRADER ADR or generate 5.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

AUTO TRADER ADR  vs.  National Retail Properties

AUTO TRADER ADR

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AUTO TRADER ADR are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, AUTO TRADER may actually be approaching a critical reversion point that can send shares even higher in August 2025.

National Retail Prop

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in National Retail Properties are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, National Retail is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with AUTO TRADER and National Retail

The main advantage of trading using opposite AUTO TRADER and National Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AUTO TRADER position performs unexpectedly, National Retail 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 National Retail will offset losses from the drop in National Retail's long position.

The idea behind AUTO TRADER ADR and National Retail Properties 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.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.