Correlation Between CarMax and COMBA TELECOM
Can any of the company-specific risk be diversified away by investing in both CarMax and COMBA TELECOM 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 CarMax and COMBA TELECOM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CarMax Inc and COMBA TELECOM SYST, you can compare the effects of market volatilities on CarMax and COMBA TELECOM 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 CarMax with a short position of COMBA TELECOM. Check out your portfolio center. Please also check ongoing floating volatility patterns of CarMax and COMBA TELECOM.
Diversification Opportunities for CarMax and COMBA TELECOM
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CarMax and COMBA is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding CarMax Inc and COMBA TELECOM SYST in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COMBA TELECOM SYST and CarMax 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 CarMax Inc are associated (or correlated) with COMBA TELECOM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COMBA TELECOM SYST has no effect on the direction of CarMax i.e., CarMax and COMBA TELECOM go up and down completely randomly.
Pair Corralation between CarMax and COMBA TELECOM
Assuming the 90 days horizon CarMax Inc is expected to generate 1.15 times more return on investment than COMBA TELECOM. However, CarMax is 1.15 times more volatile than COMBA TELECOM SYST. It trades about 0.06 of its potential returns per unit of risk. COMBA TELECOM SYST is currently generating about -0.07 per unit of risk. If you would invest 7,450 in CarMax Inc on September 4, 2024 and sell it today you would earn a total of 476.00 from holding CarMax Inc or generate 6.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CarMax Inc vs. COMBA TELECOM SYST
Performance |
| Timeline |
| CarMax Inc |
| COMBA TELECOM SYST |
CarMax and COMBA TELECOM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CarMax and COMBA TELECOM
The main advantage of trading using opposite CarMax and COMBA TELECOM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CarMax position performs unexpectedly, COMBA TELECOM 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 COMBA TELECOM will offset losses from the drop in COMBA TELECOM's long position.| CarMax vs. COMBA TELECOM SYST | CarMax vs. AM EAGLE OUTFITTERS | CarMax vs. Performance Food Group | CarMax vs. Gamma Communications plc |
| COMBA TELECOM vs. TOTAL GABON | COMBA TELECOM vs. Walgreens Boots Alliance | COMBA TELECOM vs. Peak Resources Limited |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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