Correlation Between Cango and AutoNation
Can any of the company-specific risk be diversified away by investing in both Cango 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 Cango and AutoNation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cango Inc and AutoNation, you can compare the effects of market volatilities on Cango 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 Cango with a short position of AutoNation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cango and AutoNation.
Diversification Opportunities for Cango and AutoNation
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Cango and AutoNation is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Cango Inc and AutoNation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AutoNation and Cango 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 Cango 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 Cango i.e., Cango and AutoNation go up and down completely randomly.
Pair Corralation between Cango and AutoNation
Given the investment horizon of 90 days Cango Inc is expected to generate 1.73 times more return on investment than AutoNation. However, Cango is 1.73 times more volatile than AutoNation. It trades about 0.08 of its potential returns per unit of risk. AutoNation is currently generating about 0.05 per unit of risk. If you would invest 134.00 in Cango Inc on August 30, 2024 and sell it today you would earn a total of 274.00 from holding Cango Inc or generate 204.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cango Inc vs. AutoNation
Performance |
| Timeline |
| Cango Inc |
| AutoNation |
Cango and AutoNation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cango and AutoNation
The main advantage of trading using opposite Cango and AutoNation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cango 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.| Cango vs. Cars Inc | Cango vs. KAR Auction Services | Cango vs. Rush Enterprises B | Cango vs. Rush Enterprises A |
| 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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