Correlation Between KAR Auction and Service Properties
Can any of the company-specific risk be diversified away by investing in both KAR Auction and Service Properties 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 KAR Auction and Service Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KAR Auction Services and Service Properties Trust, you can compare the effects of market volatilities on KAR Auction and Service Properties 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 KAR Auction with a short position of Service Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of KAR Auction and Service Properties.
Diversification Opportunities for KAR Auction and Service Properties
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between KAR and Service is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding KAR Auction Services and Service Properties Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Service Properties Trust and KAR Auction 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 KAR Auction Services are associated (or correlated) with Service Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Service Properties Trust has no effect on the direction of KAR Auction i.e., KAR Auction and Service Properties go up and down completely randomly.
Pair Corralation between KAR Auction and Service Properties
Assuming the 90 days horizon KAR Auction Services is expected to generate 0.54 times more return on investment than Service Properties. However, KAR Auction Services is 1.84 times less risky than Service Properties. It trades about 0.24 of its potential returns per unit of risk. Service Properties Trust is currently generating about 0.02 per unit of risk. If you would invest 1,440 in KAR Auction Services on November 1, 2024 and sell it today you would earn a total of 530.00 from holding KAR Auction Services or generate 36.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.33% |
| Values | Daily Returns |
KAR Auction Services vs. Service Properties Trust
Performance |
| Timeline |
| KAR Auction Services |
| Service Properties Trust |
KAR Auction and Service Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KAR Auction and Service Properties
The main advantage of trading using opposite KAR Auction and Service Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KAR Auction position performs unexpectedly, Service Properties 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 Service Properties will offset losses from the drop in Service Properties' long position.| KAR Auction vs. FUYO GENERAL LEASE | KAR Auction vs. AGNC INVESTMENT | KAR Auction vs. FIRST SAVINGS FINL | KAR Auction vs. FIRST SHIP LEASE |
| Service Properties vs. Host Hotels Resorts | Service Properties vs. Sunstone Hotel Investors | Service Properties vs. Xenia Hotels Resorts | Service Properties vs. Summit Hotel Properties |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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