Correlation Between Copart and CarMax
Can any of the company-specific risk be diversified away by investing in both Copart 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 Copart and CarMax into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Copart Inc and CarMax Inc, you can compare the effects of market volatilities on Copart 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 Copart with a short position of CarMax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Copart and CarMax.
Diversification Opportunities for Copart and CarMax
Weak diversification
The 3 months correlation between Copart and CarMax is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Copart Inc and CarMax Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CarMax Inc and Copart 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 Copart Inc 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 Copart i.e., Copart and CarMax go up and down completely randomly.
Pair Corralation between Copart and CarMax
Given the investment horizon of 90 days Copart Inc is expected to generate 0.81 times more return on investment than CarMax. However, Copart Inc is 1.23 times less risky than CarMax. It trades about 0.1 of its potential returns per unit of risk. CarMax Inc is currently generating about 0.08 per unit of risk. If you would invest 5,265 in Copart Inc on August 31, 2024 and sell it today you would earn a total of 1,074 from holding Copart Inc or generate 20.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Copart Inc vs. CarMax Inc
Performance |
| Timeline |
| Copart Inc |
| CarMax Inc |
Copart and CarMax Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Copart and CarMax
The main advantage of trading using opposite Copart and CarMax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Copart 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.| Copart vs. Global Payments | Copart vs. ABM Industries Incorporated | Copart vs. Thomson Reuters Corp | Copart vs. Aramark Holdings |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Commodity Directory Find actively traded commodities issued by global exchanges |