Correlation Between Vroom and Kingsway Financial
Can any of the company-specific risk be diversified away by investing in both Vroom and Kingsway Financial 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 Kingsway Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vroom Inc and Kingsway Financial Services, you can compare the effects of market volatilities on Vroom and Kingsway Financial 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 Kingsway Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vroom and Kingsway Financial.
Diversification Opportunities for Vroom and Kingsway Financial
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Vroom and Kingsway is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Vroom Inc and Kingsway Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingsway Financial 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 Kingsway Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingsway Financial has no effect on the direction of Vroom i.e., Vroom and Kingsway Financial go up and down completely randomly.
Pair Corralation between Vroom and Kingsway Financial
Considering the 90-day investment horizon Vroom Inc is expected to under-perform the Kingsway Financial. In addition to that, Vroom is 4.65 times more volatile than Kingsway Financial Services. It trades about -0.22 of its total potential returns per unit of risk. Kingsway Financial Services is currently generating about -0.08 per unit of volatility. If you would invest 925.00 in Kingsway Financial Services on August 28, 2024 and sell it today you would lose (37.00) from holding Kingsway Financial Services or give up 4.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vroom Inc vs. Kingsway Financial Services
Performance |
| Timeline |
| Vroom Inc |
| Kingsway Financial |
Vroom and Kingsway Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vroom and Kingsway Financial
The main advantage of trading using opposite Vroom and Kingsway Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vroom position performs unexpectedly, Kingsway Financial 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 Kingsway Financial will offset losses from the drop in Kingsway Financial's long position.| Vroom vs. CarMax Inc | Vroom vs. SunCar Technology Group | Vroom vs. U Power Limited | Vroom vs. Camping World Holdings |
| Kingsway Financial vs. CarGurus | Kingsway Financial vs. KAR Auction Services | Kingsway Financial vs. Driven Brands Holdings | Kingsway Financial 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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