Correlation Between Vroom and Group 1
Can any of the company-specific risk be diversified away by investing in both Vroom and Group 1 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 Vroom and Group 1 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vroom Inc and Group 1 Automotive, you can compare the effects of market volatilities on Vroom and Group 1 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 Vroom with a short position of Group 1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vroom and Group 1.
Diversification Opportunities for Vroom and Group 1
Very good diversification
The 3 months correlation between Vroom and Group is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Vroom Inc and Group 1 Automotive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Group 1 Automotive and Vroom 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 Vroom Inc are associated (or correlated) with Group 1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Group 1 Automotive has no effect on the direction of Vroom i.e., Vroom and Group 1 go up and down completely randomly.
Pair Corralation between Vroom and Group 1
Considering the 90-day investment horizon Vroom Inc is expected to under-perform the Group 1. In addition to that, Vroom is 3.55 times more volatile than Group 1 Automotive. It trades about -0.19 of its total potential returns per unit of risk. Group 1 Automotive is currently generating about 0.31 per unit of volatility. If you would invest 35,059 in Group 1 Automotive on August 25, 2024 and sell it today you would earn a total of 7,055 from holding Group 1 Automotive or generate 20.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vroom Inc vs. Group 1 Automotive
Performance |
| Timeline |
| Vroom Inc |
| Group 1 Automotive |
Vroom and Group 1 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vroom and Group 1
The main advantage of trading using opposite Vroom and Group 1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vroom position performs unexpectedly, Group 1 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 Group 1 will offset losses from the drop in Group 1's long position.| Vroom vs. CarMax Inc | Vroom vs. SunCar Technology Group | Vroom vs. U Power Limited | Vroom vs. Camping World Holdings |
| Group 1 vs. Kingsway Financial Services | Group 1 vs. KAR Auction Services | Group 1 vs. Cango Inc | Group 1 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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