Correlation Between Auto Trader and ATRIUM MORTGAGE

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

By analyzing existing cross correlation between Auto Trader Group and ATRIUM MORTGAGE INVESTM, you can compare the effects of market volatilities on Auto Trader and ATRIUM MORTGAGE 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 ATRIUM MORTGAGE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auto Trader and ATRIUM MORTGAGE.

Diversification Opportunities for Auto Trader and ATRIUM MORTGAGE

-0.08

Correlation Coefficient

Auto Trader  ATRIUM MORTGAGE

Good diversification

The 3 months correlation between Auto and ATRIUM is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Auto Trader Group and ATRIUM MORTGAGE INVESTM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATRIUM MORTGAGE INVESTM 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 Group are associated (or correlated) with ATRIUM MORTGAGE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATRIUM MORTGAGE INVESTM has no effect on the direction of Auto Trader i.e., Auto Trader and ATRIUM MORTGAGE go up and down completely randomly.

Pair Corralation between Auto Trader and ATRIUM MORTGAGE

Assuming the 90 days trading horizon Auto Trader Group is expected to under-perform the ATRIUM MORTGAGE. But the stock apears to be less risky and, when comparing its historical volatility, Auto Trader Group is 3.89 times less risky than ATRIUM MORTGAGE. The stock trades about -0.51 of its potential returns per unit of risk. The ATRIUM MORTGAGE INVESTM is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  722.00  in ATRIUM MORTGAGE INVESTM on October 8, 2024 and sell it today you would earn a total of  3.00  from holding ATRIUM MORTGAGE INVESTM or generate 0.42% return on investment over 90 days.

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

Auto Trader Group  vs.  ATRIUM MORTGAGE INVESTM

Auto Trader Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Auto Trader Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Auto Trader is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

ATRIUM MORTGAGE INVESTM

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ATRIUM MORTGAGE INVESTM are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, ATRIUM MORTGAGE is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Auto Trader and ATRIUM MORTGAGE

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

The idea behind Auto Trader Group and ATRIUM MORTGAGE INVESTM 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 Stocks Directory module to find actively traded stocks across global markets.