Correlation Between Rand Capital and Cars
Can any of the company-specific risk be diversified away by investing in both Rand Capital and Cars 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 Rand Capital and Cars into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rand Capital Corp and Cars Inc, you can compare the effects of market volatilities on Rand Capital and Cars 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 Rand Capital with a short position of Cars. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rand Capital and Cars.
Diversification Opportunities for Rand Capital and Cars
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Rand and Cars is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Rand Capital Corp and Cars Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cars Inc and Rand Capital 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 Rand Capital Corp are associated (or correlated) with Cars. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cars Inc has no effect on the direction of Rand Capital i.e., Rand Capital and Cars go up and down completely randomly.
Pair Corralation between Rand Capital and Cars
Given the investment horizon of 90 days Rand Capital Corp is expected to generate 2.07 times more return on investment than Cars. However, Rand Capital is 2.07 times more volatile than Cars Inc. It trades about 0.34 of its potential returns per unit of risk. Cars Inc is currently generating about 0.0 per unit of risk. If you would invest 1,640 in Rand Capital Corp on September 12, 2024 and sell it today you would earn a total of 468.00 from holding Rand Capital Corp or generate 28.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Rand Capital Corp vs. Cars Inc
Performance |
| Timeline |
| Rand Capital Corp |
| Cars Inc |
Rand Capital and Cars Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rand Capital and Cars
The main advantage of trading using opposite Rand Capital and Cars positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rand Capital position performs unexpectedly, Cars 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 Cars will offset losses from the drop in Cars' long position.| Rand Capital vs. Stellus Capital Investment | Rand Capital vs. Prospect Capital | Rand Capital vs. Gladstone Capital | Rand Capital vs. Main Street Capital |
| Cars vs. Group 1 Automotive | Cars vs. KAR Auction Services | Cars vs. CarMax Inc | Cars vs. Rush Enterprises A |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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