Correlation Between Spire Global and CarMax
Can any of the company-specific risk be diversified away by investing in both Spire Global and CarMax 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 Spire Global and CarMax into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spire Global and CarMax Inc, you can compare the effects of market volatilities on Spire Global and CarMax 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 Spire Global with a short position of CarMax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spire Global and CarMax.
Diversification Opportunities for Spire Global and CarMax
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Spire and CarMax is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Spire Global and CarMax Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CarMax Inc and Spire Global 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 Spire Global are associated (or correlated) with CarMax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CarMax Inc has no effect on the direction of Spire Global i.e., Spire Global and CarMax go up and down completely randomly.
Pair Corralation between Spire Global and CarMax
Given the investment horizon of 90 days Spire Global is expected to generate 2.79 times more return on investment than CarMax. However, Spire Global is 2.79 times more volatile than CarMax Inc. It trades about 0.08 of its potential returns per unit of risk. CarMax Inc is currently generating about 0.09 per unit of risk. If you would invest 1,114 in Spire Global on September 3, 2024 and sell it today you would earn a total of 520.00 from holding Spire Global or generate 46.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 96.69% |
| Values | Daily Returns |
Spire Global vs. CarMax Inc
Performance |
| Timeline |
| Spire Global |
| CarMax Inc |
Spire Global and CarMax Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spire Global and CarMax
The main advantage of trading using opposite Spire Global and CarMax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spire Global position performs unexpectedly, CarMax 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 CarMax will offset losses from the drop in CarMax's long position.| Spire Global vs. Lichen China Limited | Spire Global vs. Unifirst | Spire Global vs. First Advantage Corp | Spire Global vs. Performant Financial |
| CarMax vs. COSTCO WHOLESALE CDR | CarMax vs. Ross Stores | CarMax vs. SPARTAN STORES | CarMax vs. GUARDANT HEALTH CL |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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