Correlation Between CarMax and Kaixin Auto
Can any of the company-specific risk be diversified away by investing in both CarMax and Kaixin Auto 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 Kaixin Auto into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CarMax Inc and Kaixin Auto Holdings, you can compare the effects of market volatilities on CarMax and Kaixin Auto 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 Kaixin Auto. Check out your portfolio center. Please also check ongoing floating volatility patterns of CarMax and Kaixin Auto.
Diversification Opportunities for CarMax and Kaixin Auto
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CarMax and Kaixin is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding CarMax Inc and Kaixin Auto Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaixin Auto Holdings 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 Kaixin Auto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaixin Auto Holdings has no effect on the direction of CarMax i.e., CarMax and Kaixin Auto go up and down completely randomly.
Pair Corralation between CarMax and Kaixin Auto
Considering the 90-day investment horizon CarMax Inc is expected to generate 0.14 times more return on investment than Kaixin Auto. However, CarMax Inc is 7.33 times less risky than Kaixin Auto. It trades about 0.33 of its potential returns per unit of risk. Kaixin Auto Holdings is currently generating about -0.19 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 Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CarMax Inc vs. Kaixin Auto Holdings
Performance |
| Timeline |
| CarMax Inc |
| Kaixin Auto Holdings |
CarMax and Kaixin Auto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CarMax and Kaixin Auto
The main advantage of trading using opposite CarMax and Kaixin Auto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CarMax position performs unexpectedly, Kaixin Auto 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 Kaixin Auto will offset losses from the drop in Kaixin Auto's long position.| CarMax vs. Kingsway Financial Services | CarMax vs. KAR Auction Services | CarMax vs. Cango Inc | CarMax vs. Vroom Inc |
| Kaixin Auto vs. Vroom Inc | Kaixin Auto vs. Cango Inc | Kaixin Auto vs. Cars Inc | Kaixin Auto vs. KAR Auction Services |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes |