Correlation Between Cars and SYN Prop

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

By analyzing existing cross correlation between Cars Inc and SYN prop e, you can compare the effects of market volatilities on Cars and SYN Prop 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 SYN Prop. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cars and SYN Prop.

Diversification Opportunities for Cars and SYN Prop

-0.01

Correlation Coefficient

Cars  SYN Prop

Good diversification

The 3 months correlation between Cars and SYN is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Cars Inc and SYN prop e in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SYN prop e 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 SYN Prop. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SYN prop e has no effect on the direction of Cars i.e., Cars and SYN Prop go up and down completely randomly.

Pair Corralation between Cars and SYN Prop

Given the investment horizon of 90 days Cars Inc is expected to under-perform the SYN Prop. But the stock apears to be less risky and, when comparing its historical volatility, Cars Inc is 14.77 times less risky than SYN Prop. The stock trades about -0.3 of its potential returns per unit of risk. The SYN prop e is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  153.00  in SYN prop e on October 8, 2024 and sell it today you would earn a total of  373.00  from holding SYN prop e or generate 243.79% return on investment over 90 days.

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

Cars Inc  vs.  SYN prop e

Cars Inc

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cars Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Cars may actually be approaching a critical reversion point that can send shares even higher in February 2025.

SYN prop e

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SYN prop e are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, SYN Prop showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cars and SYN Prop

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

The idea behind Cars Inc and SYN prop e 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.