Correlation Between Sequoia Financial and Autosports

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

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

Diversification Opportunities for Sequoia Financial and Autosports

0.07

Correlation Coefficient

Sequoia Financial  Autosports

Significant diversification

The 3 months correlation between Sequoia and Autosports is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Sequoia Financial Group and Autosports Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autosports Group and Sequoia Financial 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 Sequoia Financial Group are associated (or correlated) with Autosports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Autosports Group has no effect on the direction of Sequoia Financial i.e., Sequoia Financial and Autosports go up and down completely randomly.

Pair Corralation between Sequoia Financial and Autosports

Assuming the 90 days trading horizon Sequoia Financial Group is expected to under-perform the Autosports. In addition to that, Sequoia Financial is 1.51 times more volatile than Autosports Group. It trades about -0.04 of its total potential returns per unit of risk. Autosports Group is currently generating about -0.02 per unit of volatility. If you would invest  216.00  in Autosports Group on September 17, 2024 and sell it today you would lose (28.00) from holding Autosports Group or give up 12.96% of portfolio value over 90 days.

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

Sequoia Financial Group  vs.  Autosports Group

Sequoia Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sequoia Financial Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Sequoia Financial is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Autosports Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Autosports Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Autosports is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Sequoia Financial and Autosports

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

The idea behind Sequoia Financial Group and Autosports Group 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.