Correlation Between CarMax and PetMed Express
Can any of the company-specific risk be diversified away by investing in both CarMax and PetMed Express 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 PetMed Express into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CarMax Inc and PetMed Express, you can compare the effects of market volatilities on CarMax and PetMed Express 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 PetMed Express. Check out your portfolio center. Please also check ongoing floating volatility patterns of CarMax and PetMed Express.
Diversification Opportunities for CarMax and PetMed Express
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CarMax and PetMed is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding CarMax Inc and PetMed Express in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PetMed Express 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 PetMed Express. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PetMed Express has no effect on the direction of CarMax i.e., CarMax and PetMed Express go up and down completely randomly.
Pair Corralation between CarMax and PetMed Express
Considering the 90-day investment horizon CarMax Inc is expected to generate 0.55 times more return on investment than PetMed Express. However, CarMax Inc is 1.83 times less risky than PetMed Express. It trades about 0.06 of its potential returns per unit of risk. PetMed Express is currently generating about -0.02 per unit of risk. If you would invest 6,394 in CarMax Inc on August 26, 2024 and sell it today you would earn a total of 1,766 from holding CarMax Inc or generate 27.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CarMax Inc vs. PetMed Express
Performance |
| Timeline |
| CarMax Inc |
| PetMed Express |
CarMax and PetMed Express Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CarMax and PetMed Express
The main advantage of trading using opposite CarMax and PetMed Express positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CarMax position performs unexpectedly, PetMed Express 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 PetMed Express will offset losses from the drop in PetMed Express' long position.| CarMax vs. Kingsway Financial Services | CarMax vs. KAR Auction Services | CarMax vs. Cango Inc | CarMax vs. Vroom Inc |
| PetMed Express vs. Oriental Culture Holding | PetMed Express vs. Hour Loop | PetMed Express vs. Qurate Retail Series | PetMed Express vs. Emerge Commerce |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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