Correlation Between Thomson Reuters and Group 1
Can any of the company-specific risk be diversified away by investing in both Thomson Reuters and Group 1 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 Thomson Reuters and Group 1 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thomson Reuters and Group 1 Automotive, you can compare the effects of market volatilities on Thomson Reuters and Group 1 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 Thomson Reuters with a short position of Group 1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thomson Reuters and Group 1.
Diversification Opportunities for Thomson Reuters and Group 1
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Thomson and Group is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Thomson Reuters and Group 1 Automotive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Group 1 Automotive and Thomson Reuters 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 Thomson Reuters are associated (or correlated) with Group 1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Group 1 Automotive has no effect on the direction of Thomson Reuters i.e., Thomson Reuters and Group 1 go up and down completely randomly.
Pair Corralation between Thomson Reuters and Group 1
Considering the 90-day investment horizon Thomson Reuters is expected to generate 0.58 times more return on investment than Group 1. However, Thomson Reuters is 1.71 times less risky than Group 1. It trades about 0.15 of its potential returns per unit of risk. Group 1 Automotive is currently generating about 0.06 per unit of risk. If you would invest 17,336 in Thomson Reuters on March 16, 2025 and sell it today you would earn a total of 2,374 from holding Thomson Reuters or generate 13.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thomson Reuters vs. Group 1 Automotive
Performance |
| Timeline |
| Thomson Reuters |
| Group 1 Automotive |
Thomson Reuters and Group 1 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thomson Reuters and Group 1
The main advantage of trading using opposite Thomson Reuters and Group 1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thomson Reuters position performs unexpectedly, Group 1 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 Group 1 will offset losses from the drop in Group 1's long position.| Thomson Reuters vs. Rentokil Initial PLC | Thomson Reuters vs. Cass Information Systems | Thomson Reuters vs. Maximus | Thomson Reuters vs. Aramark Holdings |
| Group 1 vs. Penske Automotive Group | Group 1 vs. Lithia Motors | Group 1 vs. AutoNation | Group 1 vs. Asbury Automotive Group |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
Other Complementary Tools
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences |