Correlation Between First Physicians and CarMax

Can any of the company-specific risk be diversified away by investing in both First Physicians and CarMax 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 First Physicians and CarMax into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between First Physicians Capital and CarMax Inc, you can compare the effects of market volatilities on First Physicians and CarMax 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 First Physicians with a short position of CarMax. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Physicians and CarMax.

Diversification Opportunities for First Physicians and CarMax

0.0

Correlation Coefficient

First Physicians  CarMax

Pay attention - limited upside

The 3 months correlation between First and CarMax is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding First Physicians Capital and CarMax Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CarMax Inc and First Physicians 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 First Physicians Capital are associated (or correlated) with CarMax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CarMax Inc has no effect on the direction of First Physicians i.e., First Physicians and CarMax go up and down completely randomly.

Pair Corralation between First Physicians and CarMax

If you would invest  8,035  in CarMax Inc on October 21, 2024 and sell it today you would lose (141.00) from holding CarMax Inc or give up 1.75% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	97.66%
Values	Daily Returns

First Physicians Capital  vs.  CarMax Inc

First Physicians Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Physicians Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, First Physicians is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

CarMax Inc

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CarMax Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating primary indicators, CarMax may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with First Physicians and CarMax

The main advantage of trading using opposite First Physicians and CarMax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Physicians position performs unexpectedly, CarMax 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 CarMax will offset losses from the drop in CarMax's long position.

The idea behind First Physicians Capital and CarMax Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.