Correlation Between Cars and Rush Enterprises
Can any of the company-specific risk be diversified away by investing in both Cars and Rush Enterprises 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 Cars and Rush Enterprises into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cars Inc and Rush Enterprises A, you can compare the effects of market volatilities on Cars and Rush Enterprises 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 Cars with a short position of Rush Enterprises. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cars and Rush Enterprises.
Diversification Opportunities for Cars and Rush Enterprises
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cars and Rush is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Cars Inc and Rush Enterprises A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rush Enterprises A and Cars 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 Cars Inc are associated (or correlated) with Rush Enterprises. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rush Enterprises A has no effect on the direction of Cars i.e., Cars and Rush Enterprises go up and down completely randomly.
Pair Corralation between Cars and Rush Enterprises
Given the investment horizon of 90 days Cars Inc is expected to generate 0.82 times more return on investment than Rush Enterprises. However, Cars Inc is 1.21 times less risky than Rush Enterprises. It trades about 0.42 of its potential returns per unit of risk. Rush Enterprises A is currently generating about 0.23 per unit of risk. If you would invest 1,615 in Cars Inc on August 28, 2024 and sell it today you would earn a total of 374.00 from holding Cars Inc or generate 23.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cars Inc vs. Rush Enterprises A
Performance |
| Timeline |
| Cars Inc |
| Rush Enterprises A |
Cars and Rush Enterprises Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cars and Rush Enterprises
The main advantage of trading using opposite Cars and Rush Enterprises positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cars position performs unexpectedly, Rush Enterprises 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 Rush Enterprises will offset losses from the drop in Rush Enterprises' long position.The idea behind Cars Inc and Rush Enterprises A pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Rush Enterprises vs. Kingsway Financial Services | Rush Enterprises vs. Group 1 Automotive | Rush Enterprises vs. KAR Auction Services | Rush Enterprises vs. Cars Inc |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
Other Complementary Tools
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets |