Correlation Between CarMax and Lookers Plc
Can any of the company-specific risk be diversified away by investing in both CarMax and Lookers Plc 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 Lookers Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CarMax Inc and Lookers Plc, you can compare the effects of market volatilities on CarMax and Lookers Plc 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 Lookers Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of CarMax and Lookers Plc.
Diversification Opportunities for CarMax and Lookers Plc
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CarMax and Lookers is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding CarMax Inc and Lookers Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lookers Plc 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 Lookers Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lookers Plc has no effect on the direction of CarMax i.e., CarMax and Lookers Plc go up and down completely randomly.
Pair Corralation between CarMax and Lookers Plc
If you would invest 7,230 in CarMax Inc on September 2, 2024 and sell it today you would earn a total of 1,167 from holding CarMax Inc or generate 16.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 4.76% |
| Values | Daily Returns |
CarMax Inc vs. Lookers Plc
Performance |
| Timeline |
| CarMax Inc |
| Lookers Plc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
CarMax and Lookers Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CarMax and Lookers Plc
The main advantage of trading using opposite CarMax and Lookers Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CarMax position performs unexpectedly, Lookers Plc 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 Lookers Plc will offset losses from the drop in Lookers Plc's long position.The idea behind CarMax Inc and Lookers Plc 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.| Lookers Plc vs. Consumer Automotive Finance | Lookers Plc vs. Vroom Inc | Lookers Plc vs. Kaixin Auto Holdings | Lookers Plc vs. Uxin |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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