Correlation Between CarMax and SunCar Technology
Can any of the company-specific risk be diversified away by investing in both CarMax and SunCar Technology 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 SunCar Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CarMax Inc and SunCar Technology Group, you can compare the effects of market volatilities on CarMax and SunCar Technology 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 SunCar Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of CarMax and SunCar Technology.
Diversification Opportunities for CarMax and SunCar Technology
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between CarMax and SunCar is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding CarMax Inc and SunCar Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SunCar Technology 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 SunCar Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SunCar Technology has no effect on the direction of CarMax i.e., CarMax and SunCar Technology go up and down completely randomly.
Pair Corralation between CarMax and SunCar Technology
Considering the 90-day investment horizon CarMax is expected to generate 5.29 times less return on investment than SunCar Technology. But when comparing it to its historical volatility, CarMax Inc is 7.42 times less risky than SunCar Technology. It trades about 0.33 of its potential returns per unit of risk. SunCar Technology Group is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 19.00 in SunCar Technology Group on August 28, 2024 and sell it today you would earn a total of 12.00 from holding SunCar Technology Group or generate 63.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.48% |
| Values | Daily Returns |
CarMax Inc vs. SunCar Technology Group
Performance |
| Timeline |
| CarMax Inc |
| SunCar Technology |
CarMax and SunCar Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CarMax and SunCar Technology
The main advantage of trading using opposite CarMax and SunCar Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CarMax position performs unexpectedly, SunCar Technology 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 SunCar Technology will offset losses from the drop in SunCar Technology's long position.| CarMax vs. Kingsway Financial Services | CarMax vs. KAR Auction Services | CarMax vs. Cango Inc | CarMax vs. Vroom Inc |
| SunCar Technology vs. Keurig Dr Pepper | SunCar Technology vs. Naked Wines plc | SunCar Technology vs. Ambev SA ADR | SunCar Technology vs. Primo Brands |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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