Correlation Between Carsales and Prosafe SE
Can any of the company-specific risk be diversified away by investing in both Carsales and Prosafe SE 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 Carsales and Prosafe SE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CarsalesCom and Prosafe SE, you can compare the effects of market volatilities on Carsales and Prosafe SE 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 Carsales with a short position of Prosafe SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carsales and Prosafe SE.
Diversification Opportunities for Carsales and Prosafe SE
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Carsales and Prosafe is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding CarsalesCom and Prosafe SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prosafe SE and Carsales 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 CarsalesCom are associated (or correlated) with Prosafe SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prosafe SE has no effect on the direction of Carsales i.e., Carsales and Prosafe SE go up and down completely randomly.
Pair Corralation between Carsales and Prosafe SE
Assuming the 90 days horizon Carsales is expected to generate 23.63 times less return on investment than Prosafe SE. But when comparing it to its historical volatility, CarsalesCom is 15.7 times less risky than Prosafe SE. It trades about 0.13 of its potential returns per unit of risk. Prosafe SE is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 57.00 in Prosafe SE on October 23, 2024 and sell it today you would earn a total of 29.00 from holding Prosafe SE or generate 50.88% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
CarsalesCom vs. Prosafe SE
Performance |
Timeline |
CarsalesCom |
Prosafe SE |
Carsales and Prosafe SE Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Carsales and Prosafe SE
The main advantage of trading using opposite Carsales and Prosafe SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carsales position performs unexpectedly, Prosafe SE 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 Prosafe SE will offset losses from the drop in Prosafe SE's long position.Carsales vs. THRACE PLASTICS | Carsales vs. BOS BETTER ONLINE | Carsales vs. Lamar Advertising | Carsales vs. GungHo Online Entertainment |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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