Correlation Between Alfa Financial and CarMax
Can any of the company-specific risk be diversified away by investing in both Alfa Financial 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 Alfa Financial and CarMax into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alfa Financial Software and CarMax Inc, you can compare the effects of market volatilities on Alfa Financial 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 Alfa Financial with a short position of CarMax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alfa Financial and CarMax.
Diversification Opportunities for Alfa Financial and CarMax
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Alfa and CarMax is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Alfa Financial Software and CarMax Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CarMax Inc and Alfa Financial 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 Alfa Financial Software 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 Alfa Financial i.e., Alfa Financial and CarMax go up and down completely randomly.
Pair Corralation between Alfa Financial and CarMax
Assuming the 90 days trading horizon Alfa Financial Software is expected to generate 1.0 times more return on investment than CarMax. However, Alfa Financial Software is 1.0 times less risky than CarMax. It trades about 0.04 of its potential returns per unit of risk. CarMax Inc is currently generating about 0.04 per unit of risk. If you would invest 174.00 in Alfa Financial Software on October 12, 2024 and sell it today you would earn a total of 64.00 from holding Alfa Financial Software or generate 36.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alfa Financial Software vs. CarMax Inc
Performance |
| Timeline |
| Alfa Financial Software |
| CarMax Inc |
Alfa Financial and CarMax Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alfa Financial and CarMax
The main advantage of trading using opposite Alfa Financial and CarMax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alfa Financial 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.| Alfa Financial vs. Gruppo Mutuionline SpA | Alfa Financial vs. CompuGroup Medical SE | Alfa Financial vs. ZhongAn Online P | Alfa Financial vs. PULSION Medical Systems |
| CarMax vs. Take Two Interactive Software | CarMax vs. Alfa Financial Software | CarMax vs. FANDIFI TECHNOLOGY P | CarMax vs. Methode Electronics |
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 CEOs Directory module to screen CEOs from public companies around the world.
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