Correlation Between Camping World and Carvana

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Can any of the company-specific risk be diversified away by investing in both Camping World and Carvana 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 Camping World and Carvana into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Camping World Holdings and Carvana Co, you can compare the effects of market volatilities on Camping World and Carvana 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 Camping World with a short position of Carvana. Check out your portfolio center. Please also check ongoing floating volatility patterns of Camping World and Carvana.

Diversification Opportunities for Camping World and Carvana

CampingCarvanaDiversified AwayCampingCarvanaDiversified Away100%
0.55
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Camping and Carvana is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Camping World Holdings and Carvana Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carvana and Camping World 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 Camping World Holdings are associated (or correlated) with Carvana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carvana has no effect on the direction of Camping World i.e., Camping World and Carvana go up and down completely randomly.

Pair Corralation between Camping World and Carvana

Considering the 90-day investment horizon Camping World Holdings is expected to under-perform the Carvana. But the stock apears to be less risky and, when comparing its historical volatility, Camping World Holdings is 1.65 times less risky than Carvana. The stock trades about -0.01 of its potential returns per unit of risk. The Carvana Co is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  4,306  in Carvana Co on November 26, 2024 and sell it today you would earn a total of  17,448  from holding Carvana Co or generate 405.2% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Camping World Holdings  vs.  Carvana Co

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -20-10010
JavaScript chart by amCharts 3.21.15CWH CVNA
       Timeline  
Camping World Holdings 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Camping World Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in March 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb20212223242526
Carvana 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Carvana Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb180200220240260280300

Camping World and Carvana Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-4.04-3.03-2.01-1.0-0.01540.91.822.753.674.6 0.030.040.050.06
JavaScript chart by amCharts 3.21.15CWH CVNA
       Returns  

Pair Trading with Camping World and Carvana

The main advantage of trading using opposite Camping World and Carvana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Camping World position performs unexpectedly, Carvana 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 Carvana will offset losses from the drop in Carvana's long position.
The idea behind Camping World Holdings and Carvana Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.

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