Correlation Between CarMax and Cryoport
Can any of the company-specific risk be diversified away by investing in both CarMax and Cryoport 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 CarMax and Cryoport into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CarMax Inc and Cryoport, you can compare the effects of market volatilities on CarMax and Cryoport 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 CarMax with a short position of Cryoport. Check out your portfolio center. Please also check ongoing floating volatility patterns of CarMax and Cryoport.
Diversification Opportunities for CarMax and Cryoport
Very weak diversification
The 3 months correlation between CarMax and Cryoport is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding CarMax Inc and Cryoport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cryoport and CarMax 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 CarMax Inc are associated (or correlated) with Cryoport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cryoport has no effect on the direction of CarMax i.e., CarMax and Cryoport go up and down completely randomly.
Pair Corralation between CarMax and Cryoport
Considering the 90-day investment horizon CarMax Inc is expected to generate 0.5 times more return on investment than Cryoport. However, CarMax Inc is 2.01 times less risky than Cryoport. It trades about 0.33 of its potential returns per unit of risk. Cryoport is currently generating about -0.07 per unit of risk. If you would invest 7,431 in CarMax Inc on August 28, 2024 and sell it today you would earn a total of 1,084 from holding CarMax Inc or generate 14.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CarMax Inc vs. Cryoport
Performance |
| Timeline |
| CarMax Inc |
| Cryoport |
CarMax and Cryoport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CarMax and Cryoport
The main advantage of trading using opposite CarMax and Cryoport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CarMax position performs unexpectedly, Cryoport 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 Cryoport will offset losses from the drop in Cryoport's long position.The idea behind CarMax Inc and Cryoport pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Cryoport vs. BioLife Solutions | Cryoport vs. Caredx Inc | Cryoport vs. Natera Inc | Cryoport vs. iRhythm Technologies |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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