Correlation Between Auto Trader and BuzzFeed
Can any of the company-specific risk be diversified away by investing in both Auto Trader and BuzzFeed 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 Auto Trader and BuzzFeed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Auto Trader Group and BuzzFeed, you can compare the effects of market volatilities on Auto Trader and BuzzFeed 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 Auto Trader with a short position of BuzzFeed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auto Trader and BuzzFeed.
Diversification Opportunities for Auto Trader and BuzzFeed
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Auto and BuzzFeed is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Auto Trader Group and BuzzFeed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BuzzFeed and Auto Trader 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 Auto Trader Group are associated (or correlated) with BuzzFeed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BuzzFeed has no effect on the direction of Auto Trader i.e., Auto Trader and BuzzFeed go up and down completely randomly.
Pair Corralation between Auto Trader and BuzzFeed
Assuming the 90 days trading horizon Auto Trader Group is expected to generate 0.3 times more return on investment than BuzzFeed. However, Auto Trader Group is 3.37 times less risky than BuzzFeed. It trades about -0.19 of its potential returns per unit of risk. BuzzFeed is currently generating about -0.18 per unit of risk. If you would invest 81,962 in Auto Trader Group on August 20, 2025 and sell it today you would lose (14,702) from holding Auto Trader Group or give up 17.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Auto Trader Group vs. BuzzFeed
Performance |
| Timeline |
| Auto Trader Group |
| BuzzFeed |
Auto Trader and BuzzFeed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Auto Trader and BuzzFeed
The main advantage of trading using opposite Auto Trader and BuzzFeed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Auto Trader position performs unexpectedly, BuzzFeed 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 BuzzFeed will offset losses from the drop in BuzzFeed's long position.| Auto Trader vs. Polar Capital Technology | Auto Trader vs. Auction Technology Group | Auto Trader vs. Trainline Plc | Auto Trader vs. Lindsell Train Investment |
| BuzzFeed vs. MoneyHero Limited Class | BuzzFeed vs. Courtside Group, Common | BuzzFeed vs. LiveOne | BuzzFeed vs. TuanChe ADR |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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