Correlation Between Dayforce and Group 1

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Can any of the company-specific risk be diversified away by investing in both Dayforce and Group 1 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 Dayforce and Group 1 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dayforce and Group 1 Automotive, you can compare the effects of market volatilities on Dayforce and Group 1 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 Dayforce with a short position of Group 1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dayforce and Group 1.

Diversification Opportunities for Dayforce and Group 1

0.56
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Dayforce and Group is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Dayforce and Group 1 Automotive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Group 1 Automotive and Dayforce 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 Dayforce are associated (or correlated) with Group 1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Group 1 Automotive has no effect on the direction of Dayforce i.e., Dayforce and Group 1 go up and down completely randomly.

Pair Corralation between Dayforce and Group 1

Considering the 90-day investment horizon Dayforce is expected to generate 2.86 times less return on investment than Group 1. In addition to that, Dayforce is 1.08 times more volatile than Group 1 Automotive. It trades about 0.07 of its total potential returns per unit of risk. Group 1 Automotive is currently generating about 0.22 per unit of volatility. If you would invest  34,619  in Group 1 Automotive on October 25, 2024 and sell it today you would earn a total of  9,386  from holding Group 1 Automotive or generate 27.11% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Dayforce  vs.  Group 1 Automotive

 Performance 
       Timeline  
Dayforce 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Dayforce are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Dayforce may actually be approaching a critical reversion point that can send shares even higher in February 2025.
Group 1 Automotive 

Risk-Adjusted Performance

17 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Group 1 Automotive are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile basic indicators, Group 1 demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Dayforce and Group 1 Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Dayforce and Group 1

The main advantage of trading using opposite Dayforce and Group 1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dayforce position performs unexpectedly, Group 1 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 Group 1 will offset losses from the drop in Group 1's long position.
The idea behind Dayforce and Group 1 Automotive 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.

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