Correlation Between Cornish Metals and CarMax
Can any of the company-specific risk be diversified away by investing in both Cornish Metals 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 Cornish Metals and CarMax into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cornish Metals and CarMax Inc, you can compare the effects of market volatilities on Cornish Metals 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 Cornish Metals with a short position of CarMax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cornish Metals and CarMax.
Diversification Opportunities for Cornish Metals and CarMax
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Cornish and CarMax is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Cornish Metals and CarMax Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CarMax Inc and Cornish Metals 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 Cornish Metals 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 Cornish Metals i.e., Cornish Metals and CarMax go up and down completely randomly.
Pair Corralation between Cornish Metals and CarMax
Assuming the 90 days trading horizon Cornish Metals is expected to generate 1.91 times less return on investment than CarMax. In addition to that, Cornish Metals is 1.71 times more volatile than CarMax Inc. It trades about 0.08 of its total potential returns per unit of risk. CarMax Inc is currently generating about 0.27 per unit of volatility. If you would invest 7,655 in CarMax Inc on September 12, 2024 and sell it today you would earn a total of 1,074 from holding CarMax Inc or generate 14.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cornish Metals vs. CarMax Inc
Performance |
| Timeline |
| Cornish Metals |
| CarMax Inc |
Cornish Metals and CarMax Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cornish Metals and CarMax
The main advantage of trading using opposite Cornish Metals and CarMax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cornish Metals 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.| Cornish Metals vs. Givaudan SA | Cornish Metals vs. Antofagasta PLC | Cornish Metals vs. Ferrexpo PLC | Cornish Metals vs. Atalaya Mining |
| CarMax vs. Park Hotels Resorts | CarMax vs. PPHE Hotel Group | CarMax vs. Scandic Hotels Group | CarMax vs. Coeur Mining |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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