Correlation Between CarMax and Gaztransport
Can any of the company-specific risk be diversified away by investing in both CarMax and Gaztransport 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 CarMax and Gaztransport into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CarMax Inc and Gaztransport et Technigaz, you can compare the effects of market volatilities on CarMax and Gaztransport 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 CarMax with a short position of Gaztransport. Check out your portfolio center. Please also check ongoing floating volatility patterns of CarMax and Gaztransport.
Diversification Opportunities for CarMax and Gaztransport
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between CarMax and Gaztransport is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding CarMax Inc and Gaztransport et Technigaz in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaztransport et Technigaz and CarMax 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 CarMax Inc are associated (or correlated) with Gaztransport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gaztransport et Technigaz has no effect on the direction of CarMax i.e., CarMax and Gaztransport go up and down completely randomly.
Pair Corralation between CarMax and Gaztransport
Assuming the 90 days trading horizon CarMax Inc is expected to under-perform the Gaztransport. In addition to that, CarMax is 1.08 times more volatile than Gaztransport et Technigaz. It trades about -0.14 of its total potential returns per unit of risk. Gaztransport et Technigaz is currently generating about 0.47 per unit of volatility. If you would invest 12,740 in Gaztransport et Technigaz on October 23, 2024 and sell it today you would earn a total of 1,700 from holding Gaztransport et Technigaz or generate 13.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 94.74% |
| Values | Daily Returns |
CarMax Inc vs. Gaztransport et Technigaz
Performance |
| Timeline |
| CarMax Inc |
| Gaztransport et Technigaz |
CarMax and Gaztransport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CarMax and Gaztransport
The main advantage of trading using opposite CarMax and Gaztransport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CarMax position performs unexpectedly, Gaztransport 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 Gaztransport will offset losses from the drop in Gaztransport's long position.| CarMax vs. Gaztransport et Technigaz | CarMax vs. Various Eateries PLC | CarMax vs. Litigation Capital Management | CarMax vs. Empire Metals Limited |
| Gaztransport vs. Home Depot | Gaztransport vs. Weiss Korea Opportunity | Gaztransport vs. River and Mercantile | Gaztransport vs. Chrysalis Investments |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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