Correlation Between Sonic Automotive and Guess
Can any of the company-specific risk be diversified away by investing in both Sonic Automotive and Guess 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 Guess into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sonic Automotive and Guess Inc, you can compare the effects of market volatilities on Sonic Automotive and Guess 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 Guess. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sonic Automotive and Guess.
Diversification Opportunities for Sonic Automotive and Guess
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sonic and Guess is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Sonic Automotive and Guess Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guess Inc 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 Guess. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guess Inc has no effect on the direction of Sonic Automotive i.e., Sonic Automotive and Guess go up and down completely randomly.
Pair Corralation between Sonic Automotive and Guess
Considering the 90-day investment horizon Sonic Automotive is expected to generate 1.02 times more return on investment than Guess. However, Sonic Automotive is 1.02 times more volatile than Guess Inc. It trades about 0.06 of its potential returns per unit of risk. Guess Inc is currently generating about -0.01 per unit of risk. If you would invest 5,014 in Sonic Automotive on August 26, 2024 and sell it today you would earn a total of 1,643 from holding Sonic Automotive or generate 32.77% 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. Guess Inc
Performance |
| Timeline |
| Sonic Automotive |
| Guess Inc |
Sonic Automotive and Guess Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sonic Automotive and Guess
The main advantage of trading using opposite Sonic Automotive and Guess positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sonic Automotive position performs unexpectedly, Guess 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 Guess will offset losses from the drop in Guess' 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
Other Complementary Tools
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities |