Correlation Between AutoNation and Contextlogic
Can any of the company-specific risk be diversified away by investing in both AutoNation and Contextlogic 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 AutoNation and Contextlogic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AutoNation and Contextlogic, you can compare the effects of market volatilities on AutoNation and Contextlogic 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 AutoNation with a short position of Contextlogic. Check out your portfolio center. Please also check ongoing floating volatility patterns of AutoNation and Contextlogic.
Diversification Opportunities for AutoNation and Contextlogic
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between AutoNation and Contextlogic is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding AutoNation and Contextlogic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Contextlogic and AutoNation 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 AutoNation are associated (or correlated) with Contextlogic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Contextlogic has no effect on the direction of AutoNation i.e., AutoNation and Contextlogic go up and down completely randomly.
Pair Corralation between AutoNation and Contextlogic
Allowing for the 90-day total investment horizon AutoNation is expected to generate 0.78 times more return on investment than Contextlogic. However, AutoNation is 1.28 times less risky than Contextlogic. It trades about 0.25 of its potential returns per unit of risk. Contextlogic is currently generating about 0.17 per unit of risk. If you would invest 15,803 in AutoNation on August 27, 2024 and sell it today you would earn a total of 1,443 from holding AutoNation or generate 9.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AutoNation vs. Contextlogic
Performance |
| Timeline |
| AutoNation |
| Contextlogic |
AutoNation and Contextlogic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AutoNation and Contextlogic
The main advantage of trading using opposite AutoNation and Contextlogic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AutoNation position performs unexpectedly, Contextlogic 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 Contextlogic will offset losses from the drop in Contextlogic's long position.| AutoNation vs. Kingsway Financial Services | AutoNation vs. KAR Auction Services | AutoNation vs. Cango Inc | AutoNation vs. Vroom Inc |
| Contextlogic vs. Grupo Simec SAB | Contextlogic vs. Titan International | Contextlogic vs. Amkor Technology | Contextlogic vs. Kaiser Aluminum |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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