Correlation Between LASSONDE INDUSTINC and Cars

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

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

Diversification Opportunities for LASSONDE INDUSTINC and Cars

0.59

Correlation Coefficient

LASSONDE INDUSTINC  Cars

Very weak diversification

The 3 months correlation between LASSONDE and Cars is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding LASSONDE INDUSTINC A and Cars Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cars Inc and LASSONDE INDUSTINC 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 LASSONDE INDUSTINC A are associated (or correlated) with Cars. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cars Inc has no effect on the direction of LASSONDE INDUSTINC i.e., LASSONDE INDUSTINC and Cars go up and down completely randomly.

Pair Corralation between LASSONDE INDUSTINC and Cars

Assuming the 90 days horizon LASSONDE INDUSTINC is expected to generate 2.17 times less return on investment than Cars. In addition to that, LASSONDE INDUSTINC is 1.01 times more volatile than Cars Inc. It trades about 0.05 of its total potential returns per unit of risk. Cars Inc is currently generating about 0.11 per unit of volatility. If you would invest  1,530  in Cars Inc on September 13, 2024 and sell it today you would earn a total of  260.00  from holding Cars Inc or generate 16.99% return on investment over 90 days.

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

LASSONDE INDUSTINC A  vs.  Cars Inc

LASSONDE INDUSTINC

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in LASSONDE INDUSTINC A are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, LASSONDE INDUSTINC may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Cars Inc

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cars Inc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Cars reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with LASSONDE INDUSTINC and Cars

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

The idea behind LASSONDE INDUSTINC A and Cars Inc 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.