Correlation Between AutoNation and Daily Journal
Can any of the company-specific risk be diversified away by investing in both AutoNation and Daily Journal 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 Daily Journal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AutoNation and Daily Journal Corp, you can compare the effects of market volatilities on AutoNation and Daily Journal 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 Daily Journal. Check out your portfolio center. Please also check ongoing floating volatility patterns of AutoNation and Daily Journal.
Diversification Opportunities for AutoNation and Daily Journal
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AutoNation and Daily is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding AutoNation and Daily Journal Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daily Journal Corp 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 Daily Journal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daily Journal Corp has no effect on the direction of AutoNation i.e., AutoNation and Daily Journal go up and down completely randomly.
Pair Corralation between AutoNation and Daily Journal
Allowing for the 90-day total investment horizon AutoNation is expected to generate 1.12 times more return on investment than Daily Journal. However, AutoNation is 1.12 times more volatile than Daily Journal Corp. It trades about 0.03 of its potential returns per unit of risk. Daily Journal Corp is currently generating about 0.03 per unit of risk. If you would invest 11,956 in AutoNation on January 20, 2024 and sell it today you would earn a total of 3,506 from holding AutoNation or generate 29.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.79% |
| Values | Daily Returns |
AutoNation vs. Daily Journal Corp
Performance |
| Timeline |
| AutoNation |
| Daily Journal Corp |
AutoNation and Daily Journal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AutoNation and Daily Journal
The main advantage of trading using opposite AutoNation and Daily Journal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AutoNation position performs unexpectedly, Daily Journal 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 Daily Journal will offset losses from the drop in Daily Journal's long position.| AutoNation vs. Asbury Automotive Group | AutoNation vs. Penske Automotive Group | AutoNation vs. Group 1 Automotive |
| Daily Journal vs. American Software | Daily Journal vs. Meridianlink | Daily Journal vs. Model N | Daily Journal vs. CoreCard Corp |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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