Correlation Between KAR Auction and Lazydays Holdings
Can any of the company-specific risk be diversified away by investing in both KAR Auction and Lazydays Holdings 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 Lazydays Holdings 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 Lazydays Holdings, you can compare the effects of market volatilities on KAR Auction and Lazydays Holdings 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 Lazydays Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of KAR Auction and Lazydays Holdings.
Diversification Opportunities for KAR Auction and Lazydays Holdings
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between KAR and Lazydays is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding KAR Auction Services and Lazydays Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lazydays 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 Lazydays Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lazydays Holdings has no effect on the direction of KAR Auction i.e., KAR Auction and Lazydays Holdings go up and down completely randomly.
Pair Corralation between KAR Auction and Lazydays Holdings
Considering the 90-day investment horizon KAR Auction is expected to generate 1.92 times less return on investment than Lazydays Holdings. But when comparing it to its historical volatility, KAR Auction Services is 1.95 times less risky than Lazydays Holdings. It trades about 0.05 of its potential returns per unit of risk. Lazydays Holdings is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,171 in Lazydays Holdings on August 31, 2024 and sell it today you would earn a total of 41.00 from holding Lazydays Holdings or generate 3.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 8.56% |
| Values | Daily Returns |
KAR Auction Services vs. Lazydays Holdings
Performance |
| Timeline |
| KAR Auction Services |
| Lazydays Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
KAR Auction and Lazydays Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KAR Auction and Lazydays Holdings
The main advantage of trading using opposite KAR Auction and Lazydays Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KAR Auction position performs unexpectedly, Lazydays Holdings 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 Lazydays Holdings will offset losses from the drop in Lazydays Holdings' long position.| KAR Auction vs. CarGurus | KAR Auction vs. Kingsway Financial Services | KAR Auction vs. Driven Brands Holdings | KAR Auction vs. Group 1 Automotive |
| Lazydays Holdings vs. Limbach Holdings | Lazydays Holdings vs. Clarus Corp | Lazydays Holdings vs. Onewater Marine | Lazydays Holdings vs. One Group Hospitality |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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