Correlation Between RDE, Common and TrueCar

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

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

Diversification Opportunities for RDE, Common and TrueCar

-0.88

Correlation Coefficient

RDE, Common  TrueCar

Pay attention - limited upside

The 3 months correlation between RDE, and TrueCar is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding RDE, Common Stock and TrueCar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TrueCar and RDE, Common 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 RDE, Common Stock are associated (or correlated) with TrueCar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TrueCar has no effect on the direction of RDE, Common i.e., RDE, Common and TrueCar go up and down completely randomly.

Pair Corralation between RDE, Common and TrueCar

Given the investment horizon of 90 days RDE, Common Stock is expected to under-perform the TrueCar. In addition to that, RDE, Common is 2.36 times more volatile than TrueCar. It trades about -0.28 of its total potential returns per unit of risk. TrueCar is currently generating about 0.17 per unit of volatility. If you would invest  313.00  in TrueCar on September 12, 2024 and sell it today you would earn a total of  109.50  from holding TrueCar or generate 34.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	62.5%
Values	Daily Returns

RDE, Common Stock  vs.  TrueCar

RDE, Common Stock

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RDE, Common Stock has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

TrueCar

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TrueCar are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, TrueCar exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with RDE, Common and TrueCar

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

The idea behind RDE, Common Stock and TrueCar 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.