Correlation Between Exponent and KAR Auction
Can any of the company-specific risk be diversified away by investing in both Exponent 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 Exponent and KAR Auction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Exponent and KAR Auction Services, you can compare the effects of market volatilities on Exponent 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 Exponent with a short position of KAR Auction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exponent and KAR Auction.
Diversification Opportunities for Exponent and KAR Auction
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Exponent and KAR is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Exponent 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 Exponent 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 Exponent 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 Exponent i.e., Exponent and KAR Auction go up and down completely randomly.
Pair Corralation between Exponent and KAR Auction
Given the investment horizon of 90 days Exponent is expected to generate 2.77 times less return on investment than KAR Auction. But when comparing it to its historical volatility, Exponent is 1.12 times less risky than KAR Auction. It trades about 0.03 of its potential returns per unit of risk. KAR Auction Services is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,719 in KAR Auction Services on September 1, 2024 and sell it today you would earn a total of 301.00 from holding KAR Auction Services or generate 17.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Exponent vs. KAR Auction Services
Performance |
| Timeline |
| Exponent |
| KAR Auction Services |
Exponent and KAR Auction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exponent and KAR Auction
The main advantage of trading using opposite Exponent and KAR Auction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exponent 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.| Exponent vs. CRA International | Exponent vs. Huron Consulting Group | Exponent vs. Franklin Covey | Exponent vs. ICF International |
| 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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