Correlation Between Sonic Automotive and Jeffs Brands
Can any of the company-specific risk be diversified away by investing in both Sonic Automotive and Jeffs Brands 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 Jeffs Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sonic Automotive and Jeffs Brands, you can compare the effects of market volatilities on Sonic Automotive and Jeffs Brands 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 Jeffs Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sonic Automotive and Jeffs Brands.
Diversification Opportunities for Sonic Automotive and Jeffs Brands
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sonic and Jeffs is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Sonic Automotive and Jeffs Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jeffs Brands 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 Jeffs Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jeffs Brands has no effect on the direction of Sonic Automotive i.e., Sonic Automotive and Jeffs Brands go up and down completely randomly.
Pair Corralation between Sonic Automotive and Jeffs Brands
Considering the 90-day investment horizon Sonic Automotive is expected to generate 0.41 times more return on investment than Jeffs Brands. However, Sonic Automotive is 2.45 times less risky than Jeffs Brands. It trades about 0.49 of its potential returns per unit of risk. Jeffs Brands is currently generating about -0.16 per unit of risk. If you would invest 6,310 in Sonic Automotive on November 4, 2024 and sell it today you would earn a total of 1,115 from holding Sonic Automotive or generate 17.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sonic Automotive vs. Jeffs Brands
Performance |
| Timeline |
| Sonic Automotive |
| Jeffs Brands |
Sonic Automotive and Jeffs Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sonic Automotive and Jeffs Brands
The main advantage of trading using opposite Sonic Automotive and Jeffs Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sonic Automotive position performs unexpectedly, Jeffs Brands 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 Jeffs Brands will offset losses from the drop in Jeffs Brands' long position.| Sonic Automotive vs. Lithia Motors | Sonic Automotive vs. AutoNation | Sonic Automotive vs. Asbury Automotive Group | Sonic Automotive vs. Penske Automotive Group |
| Jeffs Brands vs. Hour Loop | Jeffs Brands vs. Kidpik Corp | Jeffs Brands vs. MOGU Inc | Jeffs Brands vs. Jowell Global |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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