Correlation Between KAR Auction and Shift Technologies
Can any of the company-specific risk be diversified away by investing in both KAR Auction and Shift Technologies 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 Shift Technologies 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 Shift Technologies, you can compare the effects of market volatilities on KAR Auction and Shift Technologies 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 Shift Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of KAR Auction and Shift Technologies.
Diversification Opportunities for KAR Auction and Shift Technologies
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between KAR and Shift is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding KAR Auction Services and Shift Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shift Technologies 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 Shift Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shift Technologies has no effect on the direction of KAR Auction i.e., KAR Auction and Shift Technologies go up and down completely randomly.
Pair Corralation between KAR Auction and Shift Technologies
Considering the 90-day investment horizon KAR Auction is expected to generate 6.25 times less return on investment than Shift Technologies. But when comparing it to its historical volatility, KAR Auction Services is 3.34 times less risky than Shift Technologies. It trades about 0.05 of its potential returns per unit of risk. Shift Technologies is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 190.00 in Shift Technologies on August 31, 2024 and sell it today you would earn a total of 23.00 from holding Shift Technologies or generate 12.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 8.29% |
| Values | Daily Returns |
KAR Auction Services vs. Shift Technologies
Performance |
| Timeline |
| KAR Auction Services |
| Shift Technologies |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
KAR Auction and Shift Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KAR Auction and Shift Technologies
The main advantage of trading using opposite KAR Auction and Shift Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KAR Auction position performs unexpectedly, Shift Technologies 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 Shift Technologies will offset losses from the drop in Shift Technologies' long position.| KAR Auction vs. CarGurus | KAR Auction vs. Kingsway Financial Services | KAR Auction vs. Driven Brands Holdings | KAR Auction vs. Group 1 Automotive |
| Shift Technologies vs. Carvana Co | Shift Technologies vs. CarMax Inc | Shift Technologies vs. U Power Limited | Shift Technologies vs. Vroom Inc |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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