Correlation Between KAR Auction and Driven Brands
Can any of the company-specific risk be diversified away by investing in both KAR Auction and Driven Brands 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 KAR Auction and Driven Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KAR Auction Services and Driven Brands Holdings, you can compare the effects of market volatilities on KAR Auction and Driven Brands 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 KAR Auction with a short position of Driven Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of KAR Auction and Driven Brands.
Diversification Opportunities for KAR Auction and Driven Brands
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between KAR and Driven is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding KAR Auction Services and Driven Brands Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Driven Brands Holdings and KAR Auction 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 KAR Auction Services are associated (or correlated) with Driven Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Driven Brands Holdings has no effect on the direction of KAR Auction i.e., KAR Auction and Driven Brands go up and down completely randomly.
Pair Corralation between KAR Auction and Driven Brands
Considering the 90-day investment horizon KAR Auction Services is expected to generate 0.62 times more return on investment than Driven Brands. However, KAR Auction Services is 1.62 times less risky than Driven Brands. It trades about 0.04 of its potential returns per unit of risk. Driven Brands Holdings is currently generating about -0.02 per unit of risk. If you would invest 1,373 in KAR Auction Services on January 12, 2025 and sell it today you would earn a total of 492.00 from holding KAR Auction Services or generate 35.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KAR Auction Services vs. Driven Brands Holdings
Performance |
| Timeline |
| KAR Auction Services |
| Driven Brands Holdings |
KAR Auction and Driven Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KAR Auction and Driven Brands
The main advantage of trading using opposite KAR Auction and Driven Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KAR Auction position performs unexpectedly, Driven Brands 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 Driven Brands will offset losses from the drop in Driven Brands' long position.| KAR Auction vs. CarGurus | KAR Auction vs. Kingsway Financial Services | KAR Auction vs. Driven Brands Holdings | KAR Auction vs. Group 1 Automotive |
| Driven Brands vs. CarGurus | Driven Brands vs. KAR Auction Services | Driven Brands vs. Kingsway Financial Services | Driven Brands 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing |