Correlation Between AMCON Distributing and Prestige Cars
Can any of the company-specific risk be diversified away by investing in both AMCON Distributing and Prestige Cars 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 AMCON Distributing and Prestige Cars into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AMCON Distributing and Prestige Cars International, you can compare the effects of market volatilities on AMCON Distributing and Prestige Cars 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 AMCON Distributing with a short position of Prestige Cars. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMCON Distributing and Prestige Cars.
Diversification Opportunities for AMCON Distributing and Prestige Cars
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between AMCON and Prestige is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding AMCON Distributing and Prestige Cars International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prestige Cars Intern and AMCON Distributing 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 AMCON Distributing are associated (or correlated) with Prestige Cars. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prestige Cars Intern has no effect on the direction of AMCON Distributing i.e., AMCON Distributing and Prestige Cars go up and down completely randomly.
Pair Corralation between AMCON Distributing and Prestige Cars
Considering the 90-day investment horizon AMCON Distributing is expected to under-perform the Prestige Cars. But the stock apears to be less risky and, when comparing its historical volatility, AMCON Distributing is 3.29 times less risky than Prestige Cars. The stock trades about -0.01 of its potential returns per unit of risk. The Prestige Cars International is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 0.63 in Prestige Cars International on August 28, 2024 and sell it today you would earn a total of 0.24 from holding Prestige Cars International or generate 38.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.6% |
| Values | Daily Returns |
AMCON Distributing vs. Prestige Cars International
Performance |
| Timeline |
| AMCON Distributing |
| Prestige Cars Intern |
AMCON Distributing and Prestige Cars Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AMCON Distributing and Prestige Cars
The main advantage of trading using opposite AMCON Distributing and Prestige Cars positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMCON Distributing position performs unexpectedly, Prestige Cars 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 Prestige Cars will offset losses from the drop in Prestige Cars' long position.| AMCON Distributing vs. Steven Madden | AMCON Distributing vs. Vera Bradley | AMCON Distributing vs. Caleres | AMCON Distributing vs. Rocky Brands |
| Prestige Cars vs. Group 1 Automotive | Prestige Cars vs. AutoNation | Prestige Cars vs. Sonic Automotive | Prestige Cars vs. Asbury Automotive Group |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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