Correlation Between Beeks Trading and CarMax
Can any of the company-specific risk be diversified away by investing in both Beeks Trading 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 Beeks Trading and CarMax into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Beeks Trading and CarMax Inc, you can compare the effects of market volatilities on Beeks Trading 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 Beeks Trading with a short position of CarMax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beeks Trading and CarMax.
Diversification Opportunities for Beeks Trading and CarMax
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Beeks and CarMax is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Beeks Trading and CarMax Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CarMax Inc and Beeks Trading 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 Beeks Trading 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 Beeks Trading i.e., Beeks Trading and CarMax go up and down completely randomly.
Pair Corralation between Beeks Trading and CarMax
Assuming the 90 days trading horizon Beeks Trading is expected to generate 1.64 times more return on investment than CarMax. However, Beeks Trading is 1.64 times more volatile than CarMax Inc. It trades about -0.17 of its potential returns per unit of risk. CarMax Inc is currently generating about -0.29 per unit of risk. If you would invest 29,600 in Beeks Trading on October 13, 2024 and sell it today you would lose (2,400) from holding Beeks Trading or give up 8.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Beeks Trading vs. CarMax Inc
Performance |
| Timeline |
| Beeks Trading |
| CarMax Inc |
Beeks Trading and CarMax Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Beeks Trading and CarMax
The main advantage of trading using opposite Beeks Trading and CarMax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beeks Trading 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.| Beeks Trading vs. Allianz Technology Trust | Beeks Trading vs. Sabien Technology Group | Beeks Trading vs. Xeros Technology Group | Beeks Trading vs. Leroy Seafood Group |
| CarMax vs. Chrysalis Investments | CarMax vs. Beeks Trading | CarMax vs. Bankers Investment Trust | CarMax vs. Monks Investment Trust |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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