Correlation Between Cass Information and CarMax
Can any of the company-specific risk be diversified away by investing in both Cass Information 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 Cass Information and CarMax into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cass Information Systems and CarMax Inc, you can compare the effects of market volatilities on Cass Information 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 Cass Information with a short position of CarMax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cass Information and CarMax.
Diversification Opportunities for Cass Information and CarMax
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Cass and CarMax is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Cass Information Systems and CarMax Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CarMax Inc and Cass Information 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 Cass Information Systems 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 Cass Information i.e., Cass Information and CarMax go up and down completely randomly.
Pair Corralation between Cass Information and CarMax
Given the investment horizon of 90 days Cass Information is expected to generate 2.39 times less return on investment than CarMax. In addition to that, Cass Information is 1.04 times more volatile than CarMax Inc. It trades about 0.12 of its total potential returns per unit of risk. CarMax Inc is currently generating about 0.29 per unit of volatility. If you would invest 7,405 in CarMax Inc on August 31, 2024 and sell it today you would earn a total of 1,000.00 from holding CarMax Inc or generate 13.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cass Information Systems vs. CarMax Inc
Performance |
| Timeline |
| Cass Information Systems |
| CarMax Inc |
Cass Information and CarMax Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cass Information and CarMax
The main advantage of trading using opposite Cass Information and CarMax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cass Information 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.| Cass Information vs. Network 1 Technologies | Cass Information vs. Wilhelmina | Cass Information vs. Mader Group Limited | Cass Information vs. First Advantage Corp |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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