Correlation Between Shift Technologies and KAR Auction
Can any of the company-specific risk be diversified away by investing in both Shift Technologies and KAR Auction 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 Shift Technologies and KAR Auction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shift Technologies and KAR Auction Services, you can compare the effects of market volatilities on Shift Technologies and KAR Auction 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 Shift Technologies with a short position of KAR Auction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shift Technologies and KAR Auction.
Diversification Opportunities for Shift Technologies and KAR Auction
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Shift and KAR is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Shift Technologies and KAR Auction Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KAR Auction Services and Shift Technologies 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 Shift Technologies are associated (or correlated) with KAR Auction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KAR Auction Services has no effect on the direction of Shift Technologies i.e., Shift Technologies and KAR Auction go up and down completely randomly.
Pair Corralation between Shift Technologies and KAR Auction
Considering the 90-day investment horizon Shift Technologies is expected to generate 3.34 times more return on investment than KAR Auction. However, Shift Technologies is 3.34 times more volatile than KAR Auction Services. It trades about 0.09 of its potential returns per unit of risk. KAR Auction Services is currently generating about 0.05 per unit of risk. If you would invest 190.00 in Shift Technologies on August 31, 2024 and sell it today you would earn a total of 23.00 from holding Shift Technologies or generate 12.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 8.29% |
| Values | Daily Returns |
Shift Technologies vs. KAR Auction Services
Performance |
| Timeline |
| Shift Technologies |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| KAR Auction Services |
Shift Technologies and KAR Auction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shift Technologies and KAR Auction
The main advantage of trading using opposite Shift Technologies and KAR Auction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shift Technologies position performs unexpectedly, KAR Auction 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 KAR Auction will offset losses from the drop in KAR Auction's long position.| Shift Technologies vs. Carvana Co | Shift Technologies vs. CarMax Inc | Shift Technologies vs. U Power Limited | Shift Technologies vs. Vroom Inc |
| KAR Auction vs. CarGurus | KAR Auction vs. Kingsway Financial Services | KAR Auction vs. Driven Brands Holdings | KAR Auction vs. Group 1 Automotive |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
Other Complementary Tools
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format |