Correlation Between KAR Auction and Vroom
Can any of the company-specific risk be diversified away by investing in both KAR Auction and Vroom 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 Vroom 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 Vroom Inc, you can compare the effects of market volatilities on KAR Auction and Vroom 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 Vroom. Check out your portfolio center. Please also check ongoing floating volatility patterns of KAR Auction and Vroom.
Diversification Opportunities for KAR Auction and Vroom
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between KAR and Vroom is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding KAR Auction Services and Vroom Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vroom Inc 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 Vroom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vroom Inc has no effect on the direction of KAR Auction i.e., KAR Auction and Vroom go up and down completely randomly.
Pair Corralation between KAR Auction and Vroom
Considering the 90-day investment horizon KAR Auction Services is expected to generate 0.22 times more return on investment than Vroom. However, KAR Auction Services is 4.59 times less risky than Vroom. It trades about 0.15 of its potential returns per unit of risk. Vroom Inc is currently generating about 0.01 per unit of risk. If you would invest 1,998 in KAR Auction Services on November 8, 2024 and sell it today you would earn a total of 86.00 from holding KAR Auction Services or generate 4.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KAR Auction Services vs. Vroom Inc
Performance |
| Timeline |
| KAR Auction Services |
| Vroom Inc |
KAR Auction and Vroom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KAR Auction and Vroom
The main advantage of trading using opposite KAR Auction and Vroom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KAR Auction position performs unexpectedly, Vroom 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 Vroom will offset losses from the drop in Vroom's long position.| KAR Auction vs. CarGurus | KAR Auction vs. Kingsway Financial Services | KAR Auction vs. Driven Brands Holdings | KAR Auction vs. Group 1 Automotive |
| Vroom vs. CarMax Inc | Vroom vs. SunCar Technology Group | Vroom vs. U Power Limited | Vroom vs. Camping World Holdings |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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