Correlation Between Cango and OReilly Automotive
Can any of the company-specific risk be diversified away by investing in both Cango and OReilly Automotive 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 OReilly Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cango Inc and OReilly Automotive, you can compare the effects of market volatilities on Cango and OReilly Automotive 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 OReilly Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cango and OReilly Automotive.
Diversification Opportunities for Cango and OReilly Automotive
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cango and OReilly is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Cango Inc and OReilly Automotive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OReilly Automotive 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 OReilly Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OReilly Automotive has no effect on the direction of Cango i.e., Cango and OReilly Automotive go up and down completely randomly.
Pair Corralation between Cango and OReilly Automotive
Given the investment horizon of 90 days Cango Inc is expected to generate 5.27 times more return on investment than OReilly Automotive. However, Cango is 5.27 times more volatile than OReilly Automotive. It trades about 0.31 of its potential returns per unit of risk. OReilly Automotive is currently generating about 0.2 per unit of risk. If you would invest 248.00 in Cango Inc on August 31, 2024 and sell it today you would earn a total of 160.00 from holding Cango Inc or generate 64.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cango Inc vs. OReilly Automotive
Performance |
| Timeline |
| Cango Inc |
| OReilly Automotive |
Cango and OReilly Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cango and OReilly Automotive
The main advantage of trading using opposite Cango and OReilly Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cango position performs unexpectedly, OReilly Automotive 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 OReilly Automotive will offset losses from the drop in OReilly Automotive's long position.| Cango vs. Cars Inc | Cango vs. KAR Auction Services | Cango vs. Rush Enterprises B | Cango vs. Rush Enterprises A |
| OReilly Automotive vs. Target | OReilly Automotive vs. Lowes Companies | OReilly Automotive vs. Kohls Corp | OReilly Automotive vs. Walmart |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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