Correlation Between Rush Enterprises and Group 1
Can any of the company-specific risk be diversified away by investing in both Rush Enterprises and Group 1 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 Rush Enterprises and Group 1 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rush Enterprises A and Group 1 Automotive, you can compare the effects of market volatilities on Rush Enterprises and Group 1 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 Rush Enterprises with a short position of Group 1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rush Enterprises and Group 1.
Diversification Opportunities for Rush Enterprises and Group 1
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Rush and Group is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Rush Enterprises A and Group 1 Automotive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Group 1 Automotive and Rush Enterprises 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 Rush Enterprises A are associated (or correlated) with Group 1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Group 1 Automotive has no effect on the direction of Rush Enterprises i.e., Rush Enterprises and Group 1 go up and down completely randomly.
Pair Corralation between Rush Enterprises and Group 1
Assuming the 90 days horizon Rush Enterprises is expected to generate 1.41 times less return on investment than Group 1. In addition to that, Rush Enterprises is 1.03 times more volatile than Group 1 Automotive. It trades about 0.09 of its total potential returns per unit of risk. Group 1 Automotive is currently generating about 0.13 per unit of volatility. If you would invest 25,887 in Group 1 Automotive on August 28, 2024 and sell it today you would earn a total of 17,434 from holding Group 1 Automotive or generate 67.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rush Enterprises A vs. Group 1 Automotive
Performance |
| Timeline |
| Rush Enterprises A |
| Group 1 Automotive |
Rush Enterprises and Group 1 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rush Enterprises and Group 1
The main advantage of trading using opposite Rush Enterprises and Group 1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rush Enterprises position performs unexpectedly, Group 1 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 Group 1 will offset losses from the drop in Group 1's long position.| Rush Enterprises vs. Kingsway Financial Services | Rush Enterprises vs. Group 1 Automotive | Rush Enterprises vs. KAR Auction Services | Rush Enterprises vs. Cars Inc |
| Group 1 vs. Kingsway Financial Services | Group 1 vs. KAR Auction Services | Group 1 vs. Cango Inc | Group 1 vs. Vroom Inc |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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