Correlation Between Floor Decor and RumbleON
Can any of the company-specific risk be diversified away by investing in both Floor Decor and RumbleON 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 Floor Decor and RumbleON into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Floor Decor Holdings and RumbleON, you can compare the effects of market volatilities on Floor Decor and RumbleON 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 Floor Decor with a short position of RumbleON. Check out your portfolio center. Please also check ongoing floating volatility patterns of Floor Decor and RumbleON.
Diversification Opportunities for Floor Decor and RumbleON
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Floor and RumbleON is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Floor Decor Holdings and RumbleON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RumbleON and Floor Decor 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 Floor Decor Holdings are associated (or correlated) with RumbleON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RumbleON has no effect on the direction of Floor Decor i.e., Floor Decor and RumbleON go up and down completely randomly.
Pair Corralation between Floor Decor and RumbleON
Considering the 90-day investment horizon Floor Decor Holdings is expected to generate 0.61 times more return on investment than RumbleON. However, Floor Decor Holdings is 1.65 times less risky than RumbleON. It trades about 0.26 of its potential returns per unit of risk. RumbleON is currently generating about 0.07 per unit of risk. If you would invest 10,184 in Floor Decor Holdings on August 28, 2024 and sell it today you would earn a total of 1,738 from holding Floor Decor Holdings or generate 17.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Floor Decor Holdings vs. RumbleON
Performance |
| Timeline |
| Floor Decor Holdings |
| RumbleON |
Floor Decor and RumbleON Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Floor Decor and RumbleON
The main advantage of trading using opposite Floor Decor and RumbleON positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Floor Decor position performs unexpectedly, RumbleON 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 RumbleON will offset losses from the drop in RumbleON's long position.The idea behind Floor Decor Holdings and RumbleON 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.| RumbleON vs. Group 1 Automotive | RumbleON vs. Penske Automotive Group | RumbleON vs. Lithia Motors | RumbleON vs. AutoNation |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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