Correlation Between Cars and Pets At

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

By analyzing existing cross correlation between Cars Inc and Pets at Home, you can compare the effects of market volatilities on Cars and Pets At 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 Cars with a short position of Pets At. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cars and Pets At.

Diversification Opportunities for Cars and Pets At

-0.41

Correlation Coefficient

Cars  Pets At

Very good diversification

The 3 months correlation between Cars and Pets is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Cars Inc and Pets at Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pets at Home and Cars 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 Cars Inc are associated (or correlated) with Pets At. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pets at Home has no effect on the direction of Cars i.e., Cars and Pets At go up and down completely randomly.

Pair Corralation between Cars and Pets At

Assuming the 90 days trading horizon Cars Inc is expected to generate 1.53 times more return on investment than Pets At. However, Cars is 1.53 times more volatile than Pets at Home. It trades about -0.04 of its potential returns per unit of risk. Pets at Home is currently generating about -0.12 per unit of risk. If you would invest  1,955  in Cars Inc on September 23, 2024 and sell it today you would lose (245.00) from holding Cars Inc or give up 12.53% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	58.91%
Values	Daily Returns

Cars Inc  vs.  Pets at Home

Cars Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cars Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Cars is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pets at Home

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pets at Home has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Cars and Pets At

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

The idea behind Cars Inc and Pets at Home 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.

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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.