Correlation Between Arhaus and AutoNation
Can any of the company-specific risk be diversified away by investing in both Arhaus and AutoNation 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 Arhaus and AutoNation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arhaus Inc and AutoNation, you can compare the effects of market volatilities on Arhaus and AutoNation 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 Arhaus with a short position of AutoNation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arhaus and AutoNation.
Diversification Opportunities for Arhaus and AutoNation
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Arhaus and AutoNation is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Arhaus Inc and AutoNation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AutoNation and Arhaus 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 Arhaus Inc are associated (or correlated) with AutoNation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AutoNation has no effect on the direction of Arhaus i.e., Arhaus and AutoNation go up and down completely randomly.
Pair Corralation between Arhaus and AutoNation
Given the investment horizon of 90 days Arhaus Inc is expected to generate 2.67 times more return on investment than AutoNation. However, Arhaus is 2.67 times more volatile than AutoNation. It trades about 0.15 of its potential returns per unit of risk. AutoNation is currently generating about 0.13 per unit of risk. If you would invest 915.00 in Arhaus Inc on September 19, 2024 and sell it today you would earn a total of 100.00 from holding Arhaus Inc or generate 10.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arhaus Inc vs. AutoNation
Performance |
| Timeline |
| Arhaus Inc |
| AutoNation |
Arhaus and AutoNation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arhaus and AutoNation
The main advantage of trading using opposite Arhaus and AutoNation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arhaus position performs unexpectedly, AutoNation 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 AutoNation will offset losses from the drop in AutoNation's long position.| Arhaus vs. Floor Decor Holdings | Arhaus vs. Live Ventures | Arhaus vs. Home Depot | Arhaus vs. Lowes Companies |
| AutoNation vs. Sonic Automotive | AutoNation vs. Lithia Motors | AutoNation vs. Asbury Automotive Group | AutoNation vs. Penske Automotive 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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