Correlation Between VOLVO B and AUTO TRADER
Can any of the company-specific risk be diversified away by investing in both VOLVO B and AUTO TRADER 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 VOLVO B and AUTO TRADER into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VOLVO B UNSPADR and AUTO TRADER ADR, you can compare the effects of market volatilities on VOLVO B and AUTO TRADER 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 VOLVO B with a short position of AUTO TRADER. Check out your portfolio center. Please also check ongoing floating volatility patterns of VOLVO B and AUTO TRADER.
Diversification Opportunities for VOLVO B and AUTO TRADER
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between VOLVO and AUTO is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding VOLVO B UNSPADR and AUTO TRADER ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AUTO TRADER ADR and VOLVO B 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 VOLVO B UNSPADR are associated (or correlated) with AUTO TRADER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AUTO TRADER ADR has no effect on the direction of VOLVO B i.e., VOLVO B and AUTO TRADER go up and down completely randomly.
Pair Corralation between VOLVO B and AUTO TRADER
Assuming the 90 days trading horizon VOLVO B UNSPADR is expected to generate 0.98 times more return on investment than AUTO TRADER. However, VOLVO B UNSPADR is 1.02 times less risky than AUTO TRADER. It trades about 0.03 of its potential returns per unit of risk. AUTO TRADER ADR is currently generating about 0.02 per unit of risk. If you would invest 2,360 in VOLVO B UNSPADR on April 25, 2025 and sell it today you would earn a total of 60.00 from holding VOLVO B UNSPADR or generate 2.54% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
VOLVO B UNSPADR vs. AUTO TRADER ADR
Performance |
Timeline |
VOLVO B UNSPADR |
AUTO TRADER ADR |
VOLVO B and AUTO TRADER Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with VOLVO B and AUTO TRADER
The main advantage of trading using opposite VOLVO B and AUTO TRADER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VOLVO B position performs unexpectedly, AUTO TRADER 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 AUTO TRADER will offset losses from the drop in AUTO TRADER's long position.VOLVO B vs. PEPTONIC MEDICAL | VOLVO B vs. Geratherm Medical AG | VOLVO B vs. HK Electric Investments | VOLVO B vs. Apollo Investment Corp |
AUTO TRADER vs. TOWNSQUARE MEDIA INC | AUTO TRADER vs. InterContinental Hotels Group | AUTO TRADER vs. ZINC MEDIA GR | AUTO TRADER vs. MIRAMAR HOTEL INV |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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