Correlation Between Sonic Automotive and Cazoo
Can any of the company-specific risk be diversified away by investing in both Sonic Automotive and Cazoo 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 Sonic Automotive and Cazoo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sonic Automotive and Cazoo Group, you can compare the effects of market volatilities on Sonic Automotive and Cazoo 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 Sonic Automotive with a short position of Cazoo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sonic Automotive and Cazoo.
Diversification Opportunities for Sonic Automotive and Cazoo
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sonic and Cazoo is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Sonic Automotive and Cazoo Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cazoo Group and Sonic Automotive 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 Sonic Automotive are associated (or correlated) with Cazoo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cazoo Group has no effect on the direction of Sonic Automotive i.e., Sonic Automotive and Cazoo go up and down completely randomly.
Pair Corralation between Sonic Automotive and Cazoo
If you would invest 5,966 in Sonic Automotive on August 28, 2024 and sell it today you would earn a total of 997.00 from holding Sonic Automotive or generate 16.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 4.76% |
| Values | Daily Returns |
Sonic Automotive vs. Cazoo Group
Performance |
| Timeline |
| Sonic Automotive |
| Cazoo Group |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Sonic Automotive and Cazoo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sonic Automotive and Cazoo
The main advantage of trading using opposite Sonic Automotive and Cazoo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sonic Automotive position performs unexpectedly, Cazoo 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 Cazoo will offset losses from the drop in Cazoo's long position.| Sonic Automotive vs. Kingsway Financial Services | Sonic Automotive vs. KAR Auction Services | Sonic Automotive vs. Cango Inc | Sonic Automotive 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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