Correlation Between Group 1 and Envela Corp
Can any of the company-specific risk be diversified away by investing in both Group 1 and Envela Corp 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 Group 1 and Envela Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Group 1 Automotive and Envela Corp, you can compare the effects of market volatilities on Group 1 and Envela Corp 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 Group 1 with a short position of Envela Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Group 1 and Envela Corp.
Diversification Opportunities for Group 1 and Envela Corp
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Group and Envela is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Group 1 Automotive and Envela Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Envela Corp and Group 1 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 Group 1 Automotive are associated (or correlated) with Envela Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Envela Corp has no effect on the direction of Group 1 i.e., Group 1 and Envela Corp go up and down completely randomly.
Pair Corralation between Group 1 and Envela Corp
Considering the 90-day investment horizon Group 1 Automotive is expected to generate 0.68 times more return on investment than Envela Corp. However, Group 1 Automotive is 1.46 times less risky than Envela Corp. It trades about 0.09 of its potential returns per unit of risk. Envela Corp is currently generating about 0.03 per unit of risk. If you would invest 18,793 in Group 1 Automotive on August 30, 2024 and sell it today you would earn a total of 23,983 from holding Group 1 Automotive or generate 127.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Group 1 Automotive vs. Envela Corp
Performance |
| Timeline |
| Group 1 Automotive |
| Envela Corp |
Group 1 and Envela Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Group 1 and Envela Corp
The main advantage of trading using opposite Group 1 and Envela Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Group 1 position performs unexpectedly, Envela Corp 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 Envela Corp will offset losses from the drop in Envela Corp's long position.| Group 1 vs. Penske Automotive Group | Group 1 vs. Lithia Motors | Group 1 vs. AutoNation | Group 1 vs. Asbury Automotive Group |
| Envela Corp vs. Movado Group | Envela Corp vs. MYT Netherlands Parent | Envela Corp vs. Tapestry | Envela Corp vs. Capri Holdings |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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