Correlation Between Kingsway Financial and AutoNation
Can any of the company-specific risk be diversified away by investing in both Kingsway Financial and AutoNation 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 Kingsway Financial and AutoNation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kingsway Financial Services and AutoNation, you can compare the effects of market volatilities on Kingsway Financial and AutoNation 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 Kingsway Financial with a short position of AutoNation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kingsway Financial and AutoNation.
Diversification Opportunities for Kingsway Financial and AutoNation
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Kingsway and AutoNation is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Kingsway Financial Services and AutoNation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AutoNation and Kingsway Financial 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 Kingsway Financial Services are associated (or correlated) with AutoNation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AutoNation has no effect on the direction of Kingsway Financial i.e., Kingsway Financial and AutoNation go up and down completely randomly.
Pair Corralation between Kingsway Financial and AutoNation
Considering the 90-day investment horizon Kingsway Financial Services is expected to under-perform the AutoNation. But the stock apears to be less risky and, when comparing its historical volatility, Kingsway Financial Services is 1.12 times less risky than AutoNation. The stock trades about -0.11 of its potential returns per unit of risk. The AutoNation is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 16,977 in AutoNation on October 20, 2024 and sell it today you would earn a total of 1,548 from holding AutoNation or generate 9.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kingsway Financial Services vs. AutoNation
Performance |
| Timeline |
| Kingsway Financial |
| AutoNation |
Kingsway Financial and AutoNation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kingsway Financial and AutoNation
The main advantage of trading using opposite Kingsway Financial and AutoNation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kingsway Financial position performs unexpectedly, AutoNation 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 AutoNation will offset losses from the drop in AutoNation's long position.| Kingsway Financial vs. CarGurus | Kingsway Financial vs. KAR Auction Services | Kingsway Financial vs. Driven Brands Holdings | Kingsway Financial vs. Group 1 Automotive |
| AutoNation vs. Sonic Automotive | AutoNation vs. Lithia Motors | AutoNation vs. Asbury Automotive Group | AutoNation 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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