Correlation Between Moncler SpA and Carsales

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

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

Diversification Opportunities for Moncler SpA and Carsales

-0.73

Correlation Coefficient

Moncler SpA  Carsales

Pay attention - limited upside

The 3 months correlation between Moncler and Carsales is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Moncler SpA and CarsalesCom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CarsalesCom and Moncler SpA 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 Moncler SpA are associated (or correlated) with Carsales. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CarsalesCom has no effect on the direction of Moncler SpA i.e., Moncler SpA and Carsales go up and down completely randomly.

Pair Corralation between Moncler SpA and Carsales

Assuming the 90 days horizon Moncler SpA is expected to under-perform the Carsales. In addition to that, Moncler SpA is 1.28 times more volatile than CarsalesCom. It trades about -0.06 of its total potential returns per unit of risk. CarsalesCom is currently generating about 0.0 per unit of volatility. If you would invest  2,220  in CarsalesCom on October 8, 2024 and sell it today you would lose (20.00) from holding CarsalesCom or give up 0.9% of portfolio value over 90 days.

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

Moncler SpA  vs.  CarsalesCom

Moncler SpA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Moncler SpA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Moncler SpA is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

CarsalesCom

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CarsalesCom has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Carsales is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Moncler SpA and Carsales

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

The idea behind Moncler SpA and CarsalesCom 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.