Correlation Between I3 Verticals and KAR Auction
Can any of the company-specific risk be diversified away by investing in both I3 Verticals 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 I3 Verticals and KAR Auction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between i3 Verticals and KAR Auction Services, you can compare the effects of market volatilities on I3 Verticals 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 I3 Verticals with a short position of KAR Auction. Check out your portfolio center. Please also check ongoing floating volatility patterns of I3 Verticals and KAR Auction.
Diversification Opportunities for I3 Verticals and KAR Auction
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IIIV and KAR is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding i3 Verticals 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 I3 Verticals 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 i3 Verticals 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 I3 Verticals i.e., I3 Verticals and KAR Auction go up and down completely randomly.
Pair Corralation between I3 Verticals and KAR Auction
Given the investment horizon of 90 days I3 Verticals is expected to generate 7.86 times less return on investment than KAR Auction. In addition to that, I3 Verticals is 1.19 times more volatile than KAR Auction Services. It trades about 0.01 of its total potential returns per unit of risk. KAR Auction Services is currently generating about 0.05 per unit of volatility. If you would invest 1,350 in KAR Auction Services on August 26, 2024 and sell it today you would earn a total of 644.00 from holding KAR Auction Services or generate 47.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
i3 Verticals vs. KAR Auction Services
Performance |
| Timeline |
| i3 Verticals |
| KAR Auction Services |
I3 Verticals and KAR Auction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with I3 Verticals and KAR Auction
The main advantage of trading using opposite I3 Verticals and KAR Auction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if I3 Verticals 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.| I3 Verticals vs. Oneconnect Financial Technology | I3 Verticals vs. Global Business Travel | I3 Verticals vs. Alight Inc | I3 Verticals vs. CS Disco LLC |
| KAR Auction vs. Bassett Furniture Industries | KAR Auction vs. Hooker Furniture | KAR Auction vs. Natuzzi SpA | KAR Auction vs. Flexsteel Industries |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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