Correlation Between CDK Global and Sirius XM

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Can any of the company-specific risk be diversified away by investing in both CDK Global and Sirius XM 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 CDK Global and Sirius XM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CDK Global Holdings and Sirius XM Holding, you can compare the effects of market volatilities on CDK Global and Sirius XM 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 CDK Global with a short position of Sirius XM. Check out your portfolio center. Please also check ongoing floating volatility patterns of CDK Global and Sirius XM.

Diversification Opportunities for CDK Global and Sirius XM

-0.76
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between CDK and Sirius is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding CDK Global Holdings and Sirius XM Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sirius XM Holding and CDK Global 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 CDK Global Holdings are associated (or correlated) with Sirius XM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sirius XM Holding has no effect on the direction of CDK Global i.e., CDK Global and Sirius XM go up and down completely randomly.

Pair Corralation between CDK Global and Sirius XM

If you would invest  5,476  in CDK Global Holdings on December 29, 2023 and sell it today you would earn a total of  0.00  from holding CDK Global Holdings or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy0.81%
ValuesDaily Returns

CDK Global Holdings  vs.  Sirius XM Holding

 Performance 
       Timeline  
CDK Global Holdings 

Risk-Adjusted Performance

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Low
 
High
Very Weak
Over the last 90 days CDK Global Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, CDK Global is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.
Sirius XM Holding 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Sirius XM Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

CDK Global and Sirius XM Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with CDK Global and Sirius XM

The main advantage of trading using opposite CDK Global and Sirius XM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CDK Global position performs unexpectedly, Sirius XM 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 Sirius XM will offset losses from the drop in Sirius XM's long position.
The idea behind CDK Global Holdings and Sirius XM Holding 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.
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.

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