Correlation Between Performant Financial and KAR Auction
Can any of the company-specific risk be diversified away by investing in both Performant Financial and KAR Auction 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 Performant Financial and KAR Auction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Performant Financial and KAR Auction Services, you can compare the effects of market volatilities on Performant Financial and KAR Auction 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 Performant Financial with a short position of KAR Auction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Performant Financial and KAR Auction.
Diversification Opportunities for Performant Financial and KAR Auction
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Performant and KAR is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Performant Financial and KAR Auction Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KAR Auction Services and Performant Financial 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 Performant Financial are associated (or correlated) with KAR Auction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KAR Auction Services has no effect on the direction of Performant Financial i.e., Performant Financial and KAR Auction go up and down completely randomly.
Pair Corralation between Performant Financial and KAR Auction
Given the investment horizon of 90 days Performant Financial is expected to generate 1.9 times more return on investment than KAR Auction. However, Performant Financial is 1.9 times more volatile than KAR Auction Services. It trades about 0.03 of its potential returns per unit of risk. KAR Auction Services is currently generating about 0.05 per unit of risk. If you would invest 238.00 in Performant Financial on August 28, 2024 and sell it today you would earn a total of 78.00 from holding Performant Financial or generate 32.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Performant Financial vs. KAR Auction Services
Performance |
| Timeline |
| Performant Financial |
| KAR Auction Services |
Performant Financial and KAR Auction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Performant Financial and KAR Auction
The main advantage of trading using opposite Performant Financial and KAR Auction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Performant Financial position performs unexpectedly, KAR Auction 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 KAR Auction will offset losses from the drop in KAR Auction's long position.| Performant Financial vs. Network 1 Technologies | Performant Financial vs. Rentokil Initial PLC | Performant Financial vs. Wilhelmina | Performant Financial vs. Mader Group Limited |
| KAR Auction vs. Bassett Furniture Industries | KAR Auction vs. Hooker Furniture | KAR Auction vs. Natuzzi SpA | KAR Auction vs. Flexsteel Industries |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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