Correlation Between CarMax and Klckner Co
Can any of the company-specific risk be diversified away by investing in both CarMax and Klckner Co 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 Klckner Co into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CarMax Inc and Klckner Co SE, you can compare the effects of market volatilities on CarMax and Klckner Co 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 Klckner Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of CarMax and Klckner Co.
Diversification Opportunities for CarMax and Klckner Co
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between CarMax and Klckner is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding CarMax Inc and Klckner Co SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Klckner Co SE 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 Klckner Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Klckner Co SE has no effect on the direction of CarMax i.e., CarMax and Klckner Co go up and down completely randomly.
Pair Corralation between CarMax and Klckner Co
Considering the 90-day investment horizon CarMax Inc is expected to generate 0.69 times more return on investment than Klckner Co. However, CarMax Inc is 1.46 times less risky than Klckner Co. It trades about 0.03 of its potential returns per unit of risk. Klckner Co SE is currently generating about -0.03 per unit of risk. If you would invest 6,739 in CarMax Inc on August 24, 2024 and sell it today you would earn a total of 1,421 from holding CarMax Inc or generate 21.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 66.13% |
| Values | Daily Returns |
CarMax Inc vs. Klckner Co SE
Performance |
| Timeline |
| CarMax Inc |
| Klckner Co SE |
CarMax and Klckner Co Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CarMax and Klckner Co
The main advantage of trading using opposite CarMax and Klckner Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CarMax position performs unexpectedly, Klckner Co 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 Klckner Co will offset losses from the drop in Klckner Co's long position.The idea behind CarMax Inc and Klckner Co SE 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.| Klckner Co vs. Cleveland Cliffs | Klckner Co vs. Nucor Corp | Klckner Co vs. Steel Dynamics | Klckner Co vs. ArcelorMittal SA ADR |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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