Correlation Between Group 1 and TriSalus Life

Can any of the company-specific risk be diversified away by investing in both Group 1 and TriSalus Life 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 Group 1 and TriSalus Life into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Group 1 Automotive and TriSalus Life Sciences, you can compare the effects of market volatilities on Group 1 and TriSalus Life 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 Group 1 with a short position of TriSalus Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Group 1 and TriSalus Life.

Diversification Opportunities for Group 1 and TriSalus Life

-0.55

Correlation Coefficient

Group 1  TriSalus Life

Excellent diversification

The 3 months correlation between Group and TriSalus is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Group 1 Automotive and TriSalus Life Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TriSalus Life Sciences and Group 1 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 Group 1 Automotive are associated (or correlated) with TriSalus Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TriSalus Life Sciences has no effect on the direction of Group 1 i.e., Group 1 and TriSalus Life go up and down completely randomly.

Pair Corralation between Group 1 and TriSalus Life

Considering the 90-day investment horizon Group 1 is expected to generate 4.07 times less return on investment than TriSalus Life. But when comparing it to its historical volatility, Group 1 Automotive is 5.98 times less risky than TriSalus Life. It trades about 0.09 of its potential returns per unit of risk. TriSalus Life Sciences is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,022  in TriSalus Life Sciences on October 10, 2024 and sell it today you would lose (913.00) from holding TriSalus Life Sciences or give up 89.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	94.95%
Values	Daily Returns

Group 1 Automotive  vs.  TriSalus Life Sciences

Group 1 Automotive

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Group 1 Automotive are ranked lower than 11 (%) 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.

TriSalus Life Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TriSalus Life Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's forward indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Group 1 and TriSalus Life

The main advantage of trading using opposite Group 1 and TriSalus Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Group 1 position performs unexpectedly, TriSalus Life 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 TriSalus Life will offset losses from the drop in TriSalus Life's long position.

The idea behind Group 1 Automotive and TriSalus Life Sciences 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..