Correlation Between Kingsway Financial and CarGurus
Can any of the company-specific risk be diversified away by investing in both Kingsway Financial and CarGurus 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 CarGurus 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 CarGurus, you can compare the effects of market volatilities on Kingsway Financial and CarGurus 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 CarGurus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kingsway Financial and CarGurus.
Diversification Opportunities for Kingsway Financial and CarGurus
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kingsway and CarGurus is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Kingsway Financial Services and CarGurus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CarGurus 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 CarGurus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CarGurus has no effect on the direction of Kingsway Financial i.e., Kingsway Financial and CarGurus go up and down completely randomly.
Pair Corralation between Kingsway Financial and CarGurus
Considering the 90-day investment horizon Kingsway Financial is expected to generate 2.38 times less return on investment than CarGurus. In addition to that, Kingsway Financial is 1.03 times more volatile than CarGurus. It trades about 0.09 of its total potential returns per unit of risk. CarGurus is currently generating about 0.22 per unit of volatility. If you would invest 2,827 in CarGurus on August 28, 2024 and sell it today you would earn a total of 756.00 from holding CarGurus or generate 26.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kingsway Financial Services vs. CarGurus
Performance |
| Timeline |
| Kingsway Financial |
| CarGurus |
Kingsway Financial and CarGurus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kingsway Financial and CarGurus
The main advantage of trading using opposite Kingsway Financial and CarGurus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kingsway Financial position performs unexpectedly, CarGurus 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 CarGurus will offset losses from the drop in CarGurus' long position.| Kingsway Financial vs. CarGurus | Kingsway Financial vs. KAR Auction Services | Kingsway Financial vs. Driven Brands Holdings | Kingsway Financial vs. Group 1 Automotive |
| CarGurus vs. KAR Auction Services | CarGurus vs. Kingsway Financial Services | CarGurus vs. Driven Brands Holdings | CarGurus 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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