Correlation Between Cazoo and Carvana
Can any of the company-specific risk be diversified away by investing in both Cazoo 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 Cazoo and Carvana into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cazoo Group and Carvana Co, you can compare the effects of market volatilities on Cazoo 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 Cazoo with a short position of Carvana. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cazoo and Carvana.
Diversification Opportunities for Cazoo and Carvana
Pay attention - limited upside
The 3 months correlation between Cazoo and Carvana is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Cazoo Group and Carvana Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carvana and Cazoo 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 Cazoo Group 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 Cazoo i.e., Cazoo and Carvana go up and down completely randomly.
Pair Corralation between Cazoo and Carvana
If you would invest 19,835 in Carvana Co on November 8, 2024 and sell it today you would earn a total of 6,482 from holding Carvana Co or generate 32.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Cazoo Group vs. Carvana Co
Performance |
| Timeline |
| Cazoo Group |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Carvana |
Cazoo and Carvana Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cazoo and Carvana
The main advantage of trading using opposite Cazoo and Carvana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cazoo 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 Cazoo Group 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.| 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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