Correlation Between Carvana and Vinci SA
Can any of the company-specific risk be diversified away by investing in both Carvana and Vinci SA 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 Vinci SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carvana Co and Vinci SA ADR, you can compare the effects of market volatilities on Carvana and Vinci SA 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 Vinci SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carvana and Vinci SA.
Diversification Opportunities for Carvana and Vinci SA
Very weak diversification
The 3 months correlation between Carvana and Vinci is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Carvana Co and Vinci SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vinci SA ADR 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 Vinci SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vinci SA ADR has no effect on the direction of Carvana i.e., Carvana and Vinci SA go up and down completely randomly.
Pair Corralation between Carvana and Vinci SA
Given the investment horizon of 90 days Carvana Co is expected to generate 5.47 times more return on investment than Vinci SA. However, Carvana is 5.47 times more volatile than Vinci SA ADR. It trades about 0.12 of its potential returns per unit of risk. Vinci SA ADR is currently generating about 0.01 per unit of risk. If you would invest 1,102 in Carvana Co on November 2, 2024 and sell it today you would earn a total of 23,292 from holding Carvana Co or generate 2113.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Carvana Co vs. Vinci SA ADR
Performance |
| Timeline |
| Carvana |
| Vinci SA ADR |
Carvana and Vinci SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carvana and Vinci SA
The main advantage of trading using opposite Carvana and Vinci SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carvana position performs unexpectedly, Vinci SA 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 Vinci SA will offset losses from the drop in Vinci SA's long position.| Carvana vs. CarMax Inc | Carvana vs. U Power Limited | Carvana vs. SunCar Technology Group | Carvana vs. Jiuzi Holdings |
| Vinci SA vs. Arcadis NV | Vinci SA vs. KBR Inc | Vinci SA vs. Orion Group Holdings | Vinci SA vs. Jacobs Solutions |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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