Correlation Between Commercial Vehicle and CarMax
Can any of the company-specific risk be diversified away by investing in both Commercial Vehicle and CarMax 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 Commercial Vehicle and CarMax into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commercial Vehicle Group and CarMax Inc, you can compare the effects of market volatilities on Commercial Vehicle and CarMax 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 Commercial Vehicle with a short position of CarMax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commercial Vehicle and CarMax.
Diversification Opportunities for Commercial Vehicle and CarMax
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Commercial and CarMax is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Commercial Vehicle Group and CarMax Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CarMax Inc and Commercial Vehicle 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 Commercial Vehicle Group are associated (or correlated) with CarMax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CarMax Inc has no effect on the direction of Commercial Vehicle i.e., Commercial Vehicle and CarMax go up and down completely randomly.
Pair Corralation between Commercial Vehicle and CarMax
Assuming the 90 days trading horizon Commercial Vehicle Group is expected to under-perform the CarMax. In addition to that, Commercial Vehicle is 1.25 times more volatile than CarMax Inc. It trades about -0.05 of its total potential returns per unit of risk. CarMax Inc is currently generating about 0.03 per unit of volatility. If you would invest 6,200 in CarMax Inc on September 3, 2024 and sell it today you would earn a total of 1,888 from holding CarMax Inc or generate 30.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Commercial Vehicle Group vs. CarMax Inc
Performance |
| Timeline |
| Commercial Vehicle |
| CarMax Inc |
Commercial Vehicle and CarMax Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commercial Vehicle and CarMax
The main advantage of trading using opposite Commercial Vehicle and CarMax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commercial Vehicle position performs unexpectedly, CarMax 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 CarMax will offset losses from the drop in CarMax's long position.| Commercial Vehicle vs. Apple Inc | Commercial Vehicle vs. Apple Inc | Commercial Vehicle vs. Apple Inc | Commercial Vehicle vs. Apple Inc |
| CarMax vs. COSTCO WHOLESALE CDR | CarMax vs. Ross Stores | CarMax vs. SPARTAN STORES | CarMax vs. GUARDANT HEALTH CL |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
Other Complementary Tools
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance |