Correlation Between Cazoo and KAR Auction
Can any of the company-specific risk be diversified away by investing in both Cazoo and KAR Auction 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 KAR Auction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cazoo Group and KAR Auction Services, you can compare the effects of market volatilities on Cazoo and KAR Auction 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 KAR Auction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cazoo and KAR Auction.
Diversification Opportunities for Cazoo and KAR Auction
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Cazoo and KAR is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Cazoo Group and KAR Auction Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KAR Auction Services 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 KAR Auction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KAR Auction Services has no effect on the direction of Cazoo i.e., Cazoo and KAR Auction go up and down completely randomly.
Pair Corralation between Cazoo and KAR Auction
If you would invest 1,984 in KAR Auction Services on November 1, 2024 and sell it today you would earn a total of 91.00 from holding KAR Auction Services or generate 4.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 5.0% |
| Values | Daily Returns |
Cazoo Group vs. KAR Auction Services
Performance |
| Timeline |
| Cazoo Group |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| KAR Auction Services |
Cazoo and KAR Auction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cazoo and KAR Auction
The main advantage of trading using opposite Cazoo and KAR Auction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cazoo position performs unexpectedly, KAR Auction 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 KAR Auction will offset losses from the drop in KAR Auction's long position.The idea behind Cazoo Group and KAR Auction Services 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.| KAR Auction vs. CarGurus | KAR Auction vs. Kingsway Financial Services | KAR Auction vs. Driven Brands Holdings | KAR Auction vs. Group 1 Automotive |
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 CEOs Directory module to screen CEOs from public companies around the world.
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