Correlation Between AutoCanada and Consumer Automotive

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

By analyzing existing cross correlation between AutoCanada and Consumer Automotive Finance, you can compare the effects of market volatilities on AutoCanada and Consumer Automotive 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 AutoCanada with a short position of Consumer Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of AutoCanada and Consumer Automotive.

Diversification Opportunities for AutoCanada and Consumer Automotive

0.0

Correlation Coefficient

AutoCanada  Consumer Automotive

Pay attention - limited upside

The 3 months correlation between AutoCanada and Consumer is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding AutoCanada and Consumer Automotive Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consumer Automotive and AutoCanada 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 AutoCanada are associated (or correlated) with Consumer Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consumer Automotive has no effect on the direction of AutoCanada i.e., AutoCanada and Consumer Automotive go up and down completely randomly.

Pair Corralation between AutoCanada and Consumer Automotive

If you would invest  0.01  in Consumer Automotive Finance on December 30, 2024 and sell it today you would earn a total of  0.00  from holding Consumer Automotive Finance or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	86.15%
Values	Daily Returns

AutoCanada  vs.  Consumer Automotive Finance

AutoCanada

Risk-Adjusted Performance

Very Weak

Over the last 90 days AutoCanada has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward indicators, AutoCanada is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Consumer Automotive

Risk-Adjusted Performance

Very Weak

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

Pair Trading with AutoCanada and Consumer Automotive

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

The idea behind AutoCanada and Consumer Automotive Finance 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.