Correlation Between Group 1 and Rush Enterprises
Can any of the company-specific risk be diversified away by investing in both Group 1 and Rush Enterprises 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 Rush Enterprises 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 Rush Enterprises B, you can compare the effects of market volatilities on Group 1 and Rush Enterprises 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 Rush Enterprises. Check out your portfolio center. Please also check ongoing floating volatility patterns of Group 1 and Rush Enterprises.
Diversification Opportunities for Group 1 and Rush Enterprises
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Group and Rush is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Group 1 Automotive and Rush Enterprises B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rush Enterprises B 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 Rush Enterprises. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rush Enterprises B has no effect on the direction of Group 1 i.e., Group 1 and Rush Enterprises go up and down completely randomly.
Pair Corralation between Group 1 and Rush Enterprises
Considering the 90-day investment horizon Group 1 Automotive is expected to generate 0.98 times more return on investment than Rush Enterprises. However, Group 1 Automotive is 1.02 times less risky than Rush Enterprises. It trades about 0.09 of its potential returns per unit of risk. Rush Enterprises B is currently generating about 0.05 per unit of risk. If you would invest 18,671 in Group 1 Automotive on August 24, 2024 and sell it today you would earn a total of 23,443 from holding Group 1 Automotive or generate 125.56% 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. Rush Enterprises B
Performance |
| Timeline |
| Group 1 Automotive |
| Rush Enterprises B |
Group 1 and Rush Enterprises Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Group 1 and Rush Enterprises
The main advantage of trading using opposite Group 1 and Rush Enterprises positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Group 1 position performs unexpectedly, Rush Enterprises 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 Rush Enterprises will offset losses from the drop in Rush Enterprises' long position.| Group 1 vs. Penske Automotive Group | Group 1 vs. Lithia Motors | Group 1 vs. AutoNation | Group 1 vs. Asbury Automotive Group |
| Rush Enterprises vs. CarGurus | Rush Enterprises vs. Kingsway Financial Services | Rush Enterprises vs. Driven Brands Holdings | Rush Enterprises 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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