Correlation Between AutoNation and Copart
Can any of the company-specific risk be diversified away by investing in both AutoNation and Copart 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 AutoNation and Copart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AutoNation and Copart Inc, you can compare the effects of market volatilities on AutoNation and Copart 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 AutoNation with a short position of Copart. Check out your portfolio center. Please also check ongoing floating volatility patterns of AutoNation and Copart.
Diversification Opportunities for AutoNation and Copart
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AutoNation and Copart is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding AutoNation and Copart Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Copart Inc and AutoNation 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 AutoNation are associated (or correlated) with Copart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Copart Inc has no effect on the direction of AutoNation i.e., AutoNation and Copart go up and down completely randomly.
Pair Corralation between AutoNation and Copart
Assuming the 90 days horizon AutoNation is expected to generate 1.0 times more return on investment than Copart. However, AutoNation is 1.0 times more volatile than Copart Inc. It trades about 0.31 of its potential returns per unit of risk. Copart Inc is currently generating about -0.02 per unit of risk. If you would invest 16,520 in AutoNation on November 1, 2024 and sell it today you would earn a total of 1,510 from holding AutoNation or generate 9.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
AutoNation vs. Copart Inc
Performance |
| Timeline |
| AutoNation |
| Copart Inc |
AutoNation and Copart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AutoNation and Copart
The main advantage of trading using opposite AutoNation and Copart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AutoNation position performs unexpectedly, Copart 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 Copart will offset losses from the drop in Copart's long position.| AutoNation vs. Virtus Investment Partners | AutoNation vs. Mitsubishi Materials | AutoNation vs. MGIC INVESTMENT | AutoNation vs. Applied Materials |
| Copart vs. Zhongsheng Group Holdings | Copart vs. Penske Automotive Group | Copart vs. Asbury Automotive Group | Copart vs. USS Co |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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