Correlation Between Carsales and Berry Global

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

By analyzing existing cross correlation between CarsalesCom and Berry Global Group, you can compare the effects of market volatilities on Carsales and Berry Global 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 Berry Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carsales and Berry Global.

Diversification Opportunities for Carsales and Berry Global

0.04

Correlation Coefficient

Carsales  Berry Global

Significant diversification

The 3 months correlation between Carsales and Berry is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding CarsalesCom and Berry Global Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berry Global Group 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 Berry Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Berry Global Group has no effect on the direction of Carsales i.e., Carsales and Berry Global go up and down completely randomly.

Pair Corralation between Carsales and Berry Global

Assuming the 90 days horizon CarsalesCom is expected to under-perform the Berry Global. In addition to that, Carsales is 1.38 times more volatile than Berry Global Group. It trades about -0.11 of its total potential returns per unit of risk. Berry Global Group is currently generating about 0.07 per unit of volatility. If you would invest  6,125  in Berry Global Group on December 21, 2024 and sell it today you would earn a total of  325.00  from holding Berry Global Group or generate 5.31% return on investment over 90 days.

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

CarsalesCom  vs.  Berry Global Group

CarsalesCom

Risk-Adjusted Performance

Very Weak

Over the last 90 days CarsalesCom has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Berry Global Group

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Berry Global Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Berry Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Carsales and Berry Global

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

The idea behind CarsalesCom and Berry Global 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.