Correlation Between Dividend and Automotive Properties

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

By analyzing existing cross correlation between Dividend 15 Split and Automotive Properties Real, you can compare the effects of market volatilities on Dividend and Automotive Properties 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 Dividend with a short position of Automotive Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dividend and Automotive Properties.

Diversification Opportunities for Dividend and Automotive Properties

0.68

Correlation Coefficient

Dividend  Automotive Properties

Poor diversification

The 3 months correlation between Dividend and Automotive is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Dividend 15 Split and Automotive Properties Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Automotive Properties and Dividend 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 Dividend 15 Split are associated (or correlated) with Automotive Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Automotive Properties has no effect on the direction of Dividend i.e., Dividend and Automotive Properties go up and down completely randomly.

Pair Corralation between Dividend and Automotive Properties

Assuming the 90 days horizon Dividend 15 Split is expected to generate 1.46 times more return on investment than Automotive Properties. However, Dividend is 1.46 times more volatile than Automotive Properties Real. It trades about -0.04 of its potential returns per unit of risk. Automotive Properties Real is currently generating about -0.1 per unit of risk. If you would invest  596.00  in Dividend 15 Split on December 26, 2024 and sell it today you would lose (40.00) from holding Dividend 15 Split or give up 6.71% of portfolio value over 90 days.

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

Dividend 15 Split  vs.  Automotive Properties Real

Dividend 15 Split

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dividend 15 Split has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Dividend is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Automotive Properties

Risk-Adjusted Performance

Very Weak

Over the last 90 days Automotive Properties Real has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Dividend and Automotive Properties

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

The idea behind Dividend 15 Split and Automotive Properties Real 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.