Correlation Between Carvana and ENN Energy
Can any of the company-specific risk be diversified away by investing in both Carvana and ENN Energy 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 ENN Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carvana Co and ENN Energy Holdings, you can compare the effects of market volatilities on Carvana and ENN Energy 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 ENN Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carvana and ENN Energy.
Diversification Opportunities for Carvana and ENN Energy
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Carvana and ENN is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Carvana Co and ENN Energy Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENN Energy Holdings 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 ENN Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENN Energy Holdings has no effect on the direction of Carvana i.e., Carvana and ENN Energy go up and down completely randomly.
Pair Corralation between Carvana and ENN Energy
Given the investment horizon of 90 days Carvana Co is expected to generate 1.48 times more return on investment than ENN Energy. However, Carvana is 1.48 times more volatile than ENN Energy Holdings. It trades about 0.51 of its potential returns per unit of risk. ENN Energy Holdings is currently generating about -0.15 per unit of risk. If you would invest 19,700 in Carvana Co on November 9, 2024 and sell it today you would earn a total of 6,617 from holding Carvana Co or generate 33.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Carvana Co vs. ENN Energy Holdings
Performance |
| Timeline |
| Carvana |
| ENN Energy Holdings |
Carvana and ENN Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carvana and ENN Energy
The main advantage of trading using opposite Carvana and ENN Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carvana position performs unexpectedly, ENN Energy 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 ENN Energy will offset losses from the drop in ENN Energy's long position.| Carvana vs. CarMax Inc | Carvana vs. U Power Limited | Carvana vs. SunCar Technology Group | Carvana vs. Jiuzi 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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