Correlation Between AutoNation and Sportsmans
Can any of the company-specific risk be diversified away by investing in both AutoNation and Sportsmans 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 AutoNation and Sportsmans into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AutoNation and Sportsmans, you can compare the effects of market volatilities on AutoNation and Sportsmans 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 AutoNation with a short position of Sportsmans. Check out your portfolio center. Please also check ongoing floating volatility patterns of AutoNation and Sportsmans.
Diversification Opportunities for AutoNation and Sportsmans
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between AutoNation and Sportsmans is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding AutoNation and Sportsmans in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sportsmans and AutoNation 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 AutoNation are associated (or correlated) with Sportsmans. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sportsmans has no effect on the direction of AutoNation i.e., AutoNation and Sportsmans go up and down completely randomly.
Pair Corralation between AutoNation and Sportsmans
Allowing for the 90-day total investment horizon AutoNation is expected to generate 0.42 times more return on investment than Sportsmans. However, AutoNation is 2.41 times less risky than Sportsmans. It trades about 0.04 of its potential returns per unit of risk. Sportsmans is currently generating about 0.02 per unit of risk. If you would invest 15,938 in AutoNation on September 26, 2024 and sell it today you would earn a total of 1,446 from holding AutoNation or generate 9.07% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
AutoNation vs. Sportsmans
Performance |
Timeline |
AutoNation |
Sportsmans |
AutoNation and Sportsmans Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with AutoNation and Sportsmans
The main advantage of trading using opposite AutoNation and Sportsmans positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AutoNation position performs unexpectedly, Sportsmans 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 Sportsmans will offset losses from the drop in Sportsmans' long position.AutoNation vs. Macys Inc | AutoNation vs. Wayfair | AutoNation vs. 1StdibsCom | AutoNation vs. Boqii Holding Limited |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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