Correlation Between Arhaus and Carvana
Can any of the company-specific risk be diversified away by investing in both Arhaus and Carvana 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 Carvana into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arhaus Inc and Carvana Co, you can compare the effects of market volatilities on Arhaus and Carvana 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 Carvana. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arhaus and Carvana.
Diversification Opportunities for Arhaus and Carvana
Excellent diversification
The 3 months correlation between Arhaus and Carvana is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Arhaus Inc and Carvana Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carvana 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 Carvana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carvana has no effect on the direction of Arhaus i.e., Arhaus and Carvana go up and down completely randomly.
Pair Corralation between Arhaus and Carvana
Given the investment horizon of 90 days Arhaus is expected to generate 13.73 times less return on investment than Carvana. But when comparing it to its historical volatility, Arhaus Inc is 1.53 times less risky than Carvana. It trades about 0.02 of its potential returns per unit of risk. Carvana Co is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 3,520 in Carvana Co on August 27, 2024 and sell it today you would earn a total of 22,416 from holding Carvana Co or generate 636.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arhaus Inc vs. Carvana Co
Performance |
| Timeline |
| Arhaus Inc |
| Carvana |
Arhaus and Carvana Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arhaus and Carvana
The main advantage of trading using opposite Arhaus and Carvana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arhaus position performs unexpectedly, Carvana 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 Carvana will offset losses from the drop in Carvana's long position.| Arhaus vs. Floor Decor Holdings | Arhaus vs. Live Ventures | Arhaus vs. Haverty Furniture Companies | Arhaus vs. Home Depot |
| Carvana vs. CarMax Inc | Carvana vs. U Power Limited | Carvana vs. SunCar Technology Group | Carvana vs. Jiuzi Holdings |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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