Correlation Between Carsales and Waystar Holding

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

By analyzing existing cross correlation between CarsalesCom Ltd ADR and Waystar Holding Corp, you can compare the effects of market volatilities on Carsales and Waystar Holding 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 Carsales with a short position of Waystar Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carsales and Waystar Holding.

Diversification Opportunities for Carsales and Waystar Holding

0.38

Correlation Coefficient

Carsales  Waystar Holding

Weak diversification

The 3 months correlation between Carsales and Waystar is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding CarsalesCom Ltd ADR and Waystar Holding Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waystar Holding Corp and Carsales 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 CarsalesCom Ltd ADR are associated (or correlated) with Waystar Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waystar Holding Corp has no effect on the direction of Carsales i.e., Carsales and Waystar Holding go up and down completely randomly.

Pair Corralation between Carsales and Waystar Holding

Assuming the 90 days horizon CarsalesCom Ltd ADR is expected to under-perform the Waystar Holding. In addition to that, Carsales is 1.32 times more volatile than Waystar Holding Corp. It trades about -0.01 of its total potential returns per unit of risk. Waystar Holding Corp is currently generating about 0.04 per unit of volatility. If you would invest  3,706  in Waystar Holding Corp on December 28, 2024 and sell it today you would earn a total of  148.00  from holding Waystar Holding Corp or generate 3.99% return on investment over 90 days.

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

CarsalesCom Ltd ADR  vs.  Waystar Holding Corp

CarsalesCom ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days CarsalesCom Ltd ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Carsales is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Waystar Holding Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Waystar Holding Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Waystar Holding may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Carsales and Waystar Holding

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

The idea behind CarsalesCom Ltd ADR and Waystar Holding Corp 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.