Correlation Between Inchcape Plc and CarMax
Can any of the company-specific risk be diversified away by investing in both Inchcape Plc 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 Inchcape Plc and CarMax into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Inchcape plc and CarMax Inc, you can compare the effects of market volatilities on Inchcape Plc 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 Inchcape Plc with a short position of CarMax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inchcape Plc and CarMax.
Diversification Opportunities for Inchcape Plc and CarMax
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Inchcape and CarMax is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Inchcape plc and CarMax Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CarMax Inc and Inchcape Plc 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 Inchcape plc 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 Inchcape Plc i.e., Inchcape Plc and CarMax go up and down completely randomly.
Pair Corralation between Inchcape Plc and CarMax
Assuming the 90 days trading horizon Inchcape Plc is expected to generate 1.91 times less return on investment than CarMax. But when comparing it to its historical volatility, Inchcape plc is 1.9 times less risky than CarMax. It trades about 0.11 of its potential returns per unit of risk. CarMax Inc is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 7,750 in CarMax Inc on September 24, 2024 and sell it today you would earn a total of 296.00 from holding CarMax Inc or generate 3.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Inchcape plc vs. CarMax Inc
Performance |
| Timeline |
| Inchcape plc |
| CarMax Inc |
Inchcape Plc and CarMax Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inchcape Plc and CarMax
The main advantage of trading using opposite Inchcape Plc and CarMax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inchcape Plc 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.| Inchcape Plc vs. Copart Inc | Inchcape Plc vs. Zhongsheng Group Holdings | Inchcape Plc vs. CarMax Inc | Inchcape Plc vs. DIeteren Group SA |
| CarMax vs. Copart Inc | CarMax vs. Zhongsheng Group Holdings | CarMax vs. DIeteren Group SA | CarMax vs. Penske Automotive Group |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
Other Complementary Tools
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites |