Correlation Between Sonic Automotive and ECARX Holdings
Can any of the company-specific risk be diversified away by investing in both Sonic Automotive and ECARX Holdings 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 ECARX Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sonic Automotive and ECARX Holdings Class, you can compare the effects of market volatilities on Sonic Automotive and ECARX Holdings 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 ECARX Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sonic Automotive and ECARX Holdings.
Diversification Opportunities for Sonic Automotive and ECARX Holdings
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sonic and ECARX is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Sonic Automotive and ECARX Holdings Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECARX Holdings Class 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 ECARX Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ECARX Holdings Class has no effect on the direction of Sonic Automotive i.e., Sonic Automotive and ECARX Holdings go up and down completely randomly.
Pair Corralation between Sonic Automotive and ECARX Holdings
Considering the 90-day investment horizon Sonic Automotive is expected to generate 0.87 times more return on investment than ECARX Holdings. However, Sonic Automotive is 1.15 times less risky than ECARX Holdings. It trades about 0.24 of its potential returns per unit of risk. ECARX Holdings Class is currently generating about -0.12 per unit of risk. If you would invest 5,687 in Sonic Automotive on August 26, 2024 and sell it today you would earn a total of 970.00 from holding Sonic Automotive or generate 17.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sonic Automotive vs. ECARX Holdings Class
Performance |
| Timeline |
| Sonic Automotive |
| ECARX Holdings Class |
Sonic Automotive and ECARX Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sonic Automotive and ECARX Holdings
The main advantage of trading using opposite Sonic Automotive and ECARX Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sonic Automotive position performs unexpectedly, ECARX Holdings 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 ECARX Holdings will offset losses from the drop in ECARX Holdings' long position.| Sonic Automotive vs. Kingsway Financial Services | Sonic Automotive vs. KAR Auction Services | Sonic Automotive vs. Cango Inc | Sonic Automotive vs. Vroom Inc |
| ECARX Holdings vs. Dorman Products | ECARX Holdings vs. Monro Muffler Brake | ECARX Holdings vs. Standard Motor Products | ECARX Holdings vs. Stoneridge |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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