Correlation Between Scandic Hotels and CarMax
Can any of the company-specific risk be diversified away by investing in both Scandic Hotels 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 Scandic Hotels and CarMax into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Scandic Hotels Group and CarMax Inc, you can compare the effects of market volatilities on Scandic Hotels 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 Scandic Hotels with a short position of CarMax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandic Hotels and CarMax.
Diversification Opportunities for Scandic Hotels and CarMax
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Scandic and CarMax is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Scandic Hotels Group and CarMax Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CarMax Inc and Scandic Hotels 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 Scandic Hotels Group 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 Scandic Hotels i.e., Scandic Hotels and CarMax go up and down completely randomly.
Pair Corralation between Scandic Hotels and CarMax
Assuming the 90 days trading horizon Scandic Hotels Group is expected to generate 0.78 times more return on investment than CarMax. However, Scandic Hotels Group is 1.28 times less risky than CarMax. It trades about 0.1 of its potential returns per unit of risk. CarMax Inc is currently generating about 0.04 per unit of risk. If you would invest 4,709 in Scandic Hotels Group on September 12, 2024 and sell it today you would earn a total of 2,244 from holding Scandic Hotels Group or generate 47.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.81% |
| Values | Daily Returns |
Scandic Hotels Group vs. CarMax Inc
Performance |
| Timeline |
| Scandic Hotels Group |
| CarMax Inc |
Scandic Hotels and CarMax Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scandic Hotels and CarMax
The main advantage of trading using opposite Scandic Hotels and CarMax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scandic Hotels 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.| Scandic Hotels vs. National Bank of | Scandic Hotels vs. Royal Bank of | Scandic Hotels vs. Games Workshop Group | Scandic Hotels vs. Komercni Banka |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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