Correlation Between AutoNation and PetMed Express
Can any of the company-specific risk be diversified away by investing in both AutoNation and PetMed Express 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 PetMed Express into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AutoNation and PetMed Express, you can compare the effects of market volatilities on AutoNation and PetMed Express 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 PetMed Express. Check out your portfolio center. Please also check ongoing floating volatility patterns of AutoNation and PetMed Express.
Diversification Opportunities for AutoNation and PetMed Express
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between AutoNation and PetMed is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding AutoNation and PetMed Express in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PetMed Express 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 PetMed Express. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PetMed Express has no effect on the direction of AutoNation i.e., AutoNation and PetMed Express go up and down completely randomly.
Pair Corralation between AutoNation and PetMed Express
Allowing for the 90-day total investment horizon AutoNation is expected to generate 0.59 times more return on investment than PetMed Express. However, AutoNation is 1.7 times less risky than PetMed Express. It trades about 0.05 of its potential returns per unit of risk. PetMed Express is currently generating about -0.06 per unit of risk. If you would invest 11,439 in AutoNation on October 15, 2024 and sell it today you would earn a total of 5,644 from holding AutoNation or generate 49.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AutoNation vs. PetMed Express
Performance |
| Timeline |
| AutoNation |
| PetMed Express |
AutoNation and PetMed Express Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AutoNation and PetMed Express
The main advantage of trading using opposite AutoNation and PetMed Express positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AutoNation position performs unexpectedly, PetMed Express 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 PetMed Express will offset losses from the drop in PetMed Express' long position.| AutoNation vs. Sonic Automotive | AutoNation vs. Lithia Motors | AutoNation vs. Asbury Automotive Group | AutoNation vs. Penske Automotive Group |
| PetMed Express vs. High Tide | PetMed Express vs. China Jo Jo Drugstores | PetMed Express vs. Walgreens Boots Alliance | PetMed Express vs. 111 Inc |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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