Correlation Between Dana and CarsalesCom

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

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

Diversification Opportunities for Dana and CarsalesCom

-0.34

Correlation Coefficient

Dana  CarsalesCom

Very good diversification

The 3 months correlation between Dana and CarsalesCom is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Dana Inc and CarsalesCom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CarsalesCom and Dana 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 Dana Inc are associated (or correlated) with CarsalesCom. 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 Dana i.e., Dana and CarsalesCom go up and down completely randomly.

Pair Corralation between Dana and CarsalesCom

Assuming the 90 days horizon Dana is expected to generate 41.08 times less return on investment than CarsalesCom. In addition to that, Dana is 2.95 times more volatile than CarsalesCom. It trades about 0.0 of its total potential returns per unit of risk. CarsalesCom is currently generating about 0.17 per unit of volatility. If you would invest  2,201  in CarsalesCom on September 1, 2024 and sell it today you would earn a total of  359.00  from holding CarsalesCom or generate 16.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.48%
Values	Daily Returns

Dana Inc  vs.  CarsalesCom

Dana Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dana Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Dana 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

13 of 100

Good

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

Pair Trading with Dana and CarsalesCom

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

The idea behind Dana Inc 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.