Correlation Between Gaztransport and CarMax
Can any of the company-specific risk be diversified away by investing in both Gaztransport and CarMax 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 Gaztransport and CarMax into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gaztransport et Technigaz and CarMax Inc, you can compare the effects of market volatilities on Gaztransport and CarMax 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 Gaztransport with a short position of CarMax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gaztransport and CarMax.
Diversification Opportunities for Gaztransport and CarMax
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Gaztransport and CarMax is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Gaztransport et Technigaz and CarMax Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CarMax Inc and Gaztransport 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 Gaztransport et Technigaz are associated (or correlated) with CarMax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CarMax Inc has no effect on the direction of Gaztransport i.e., Gaztransport and CarMax go up and down completely randomly.
Pair Corralation between Gaztransport and CarMax
Assuming the 90 days trading horizon Gaztransport et Technigaz is expected to generate 0.65 times more return on investment than CarMax. However, Gaztransport et Technigaz is 1.55 times less risky than CarMax. It trades about 0.36 of its potential returns per unit of risk. CarMax Inc is currently generating about 0.13 per unit of risk. If you would invest 13,290 in Gaztransport et Technigaz on November 3, 2024 and sell it today you would earn a total of 1,425 from holding Gaztransport et Technigaz or generate 10.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gaztransport et Technigaz vs. CarMax Inc
Performance |
| Timeline |
| Gaztransport et Technigaz |
| CarMax Inc |
Gaztransport and CarMax Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gaztransport and CarMax
The main advantage of trading using opposite Gaztransport and CarMax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gaztransport position performs unexpectedly, CarMax 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 CarMax will offset losses from the drop in CarMax's long position.| Gaztransport vs. Gamma Communications PLC | Gaztransport vs. Fresenius Medical Care | Gaztransport vs. Molson Coors Beverage | Gaztransport vs. Supermarket Income REIT |
| CarMax vs. Playtech Plc | CarMax vs. Batm Advanced Communications | CarMax vs. Zegona Communications Plc | CarMax vs. Universal Music 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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