Correlation Between Carvana and Osprey Bitcoin
Can any of the company-specific risk be diversified away by investing in both Carvana and Osprey Bitcoin 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 Carvana and Osprey Bitcoin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carvana Co and Osprey Bitcoin Trust, you can compare the effects of market volatilities on Carvana and Osprey Bitcoin 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 Carvana with a short position of Osprey Bitcoin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carvana and Osprey Bitcoin.
Diversification Opportunities for Carvana and Osprey Bitcoin
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Carvana and Osprey is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Carvana Co and Osprey Bitcoin Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Osprey Bitcoin Trust and Carvana 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 Carvana Co are associated (or correlated) with Osprey Bitcoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Osprey Bitcoin Trust has no effect on the direction of Carvana i.e., Carvana and Osprey Bitcoin go up and down completely randomly.
Pair Corralation between Carvana and Osprey Bitcoin
Given the investment horizon of 90 days Carvana Co is expected to generate 1.08 times more return on investment than Osprey Bitcoin. However, Carvana is 1.08 times more volatile than Osprey Bitcoin Trust. It trades about 0.29 of its potential returns per unit of risk. Osprey Bitcoin Trust is currently generating about 0.26 per unit of risk. If you would invest 14,452 in Carvana Co on September 2, 2024 and sell it today you would earn a total of 11,590 from holding Carvana Co or generate 80.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Carvana Co vs. Osprey Bitcoin Trust
Performance |
| Timeline |
| Carvana |
| Osprey Bitcoin Trust |
Carvana and Osprey Bitcoin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carvana and Osprey Bitcoin
The main advantage of trading using opposite Carvana and Osprey Bitcoin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carvana position performs unexpectedly, Osprey Bitcoin 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 Osprey Bitcoin will offset losses from the drop in Osprey Bitcoin's long position.| Carvana vs. CarMax Inc | Carvana vs. U Power Limited | Carvana vs. SunCar Technology Group | Carvana vs. Jiuzi Holdings |
| Osprey Bitcoin vs. Grayscale Bitcoin Cash | Osprey Bitcoin vs. Grayscale Litecoin Trust | Osprey Bitcoin vs. Grayscale Digital Large | Osprey Bitcoin vs. Grayscale Ethereum Trust |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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