Correlation Between DSS and CarGurus
Can any of the company-specific risk be diversified away by investing in both DSS and CarGurus 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 DSS and CarGurus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DSS Inc and CarGurus, you can compare the effects of market volatilities on DSS and CarGurus 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 DSS with a short position of CarGurus. Check out your portfolio center. Please also check ongoing floating volatility patterns of DSS and CarGurus.
Diversification Opportunities for DSS and CarGurus
Pay attention - limited upside
The 3 months correlation between DSS and CarGurus is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding DSS Inc and CarGurus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CarGurus and DSS 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 DSS Inc are associated (or correlated) with CarGurus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CarGurus has no effect on the direction of DSS i.e., DSS and CarGurus go up and down completely randomly.
Pair Corralation between DSS and CarGurus
Considering the 90-day investment horizon DSS Inc is expected to under-perform the CarGurus. In addition to that, DSS is 3.67 times more volatile than CarGurus. It trades about -0.09 of its total potential returns per unit of risk. CarGurus is currently generating about 0.06 per unit of volatility. If you would invest 3,583 in CarGurus on September 25, 2024 and sell it today you would earn a total of 71.00 from holding CarGurus or generate 1.98% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
DSS Inc vs. CarGurus
Performance |
Timeline |
DSS Inc |
CarGurus |
DSS and CarGurus Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with DSS and CarGurus
The main advantage of trading using opposite DSS and CarGurus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DSS position performs unexpectedly, CarGurus 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 CarGurus will offset losses from the drop in CarGurus' long position.DSS vs. CarGurus | DSS vs. Kingsway Financial Services | DSS vs. Driven Brands Holdings | DSS vs. Group 1 Automotive |
CarGurus vs. KAR Auction Services | CarGurus vs. Kingsway Financial Services | CarGurus vs. Driven Brands Holdings | CarGurus 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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