Correlation Between Group 1 and Camping World

Can any of the company-specific risk be diversified away by investing in both Group 1 and Camping World 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 Group 1 and Camping World into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Group 1 Automotive and Camping World Holdings, you can compare the effects of market volatilities on Group 1 and Camping World 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 Group 1 with a short position of Camping World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Group 1 and Camping World.

Diversification Opportunities for Group 1 and Camping World

0.61

Correlation Coefficient

Group 1  Camping World

Poor diversification

The 3 months correlation between Group and Camping is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Group 1 Automotive and Camping World Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Camping World Holdings and Group 1 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 Group 1 Automotive are associated (or correlated) with Camping World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Camping World Holdings has no effect on the direction of Group 1 i.e., Group 1 and Camping World go up and down completely randomly.

Pair Corralation between Group 1 and Camping World

Considering the 90-day investment horizon Group 1 Automotive is expected to generate 0.63 times more return on investment than Camping World. However, Group 1 Automotive is 1.59 times less risky than Camping World. It trades about 0.13 of its potential returns per unit of risk. Camping World Holdings is currently generating about 0.01 per unit of risk. If you would invest  36,399  in Group 1 Automotive on September 13, 2024 and sell it today you would earn a total of  6,101  from holding Group 1 Automotive or generate 16.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Group 1 Automotive  vs.  Camping World Holdings

Group 1 Automotive

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Group 1 Automotive are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, Group 1 demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Camping World Holdings

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Camping World Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Camping World is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Group 1 and Camping World

The main advantage of trading using opposite Group 1 and Camping World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Group 1 position performs unexpectedly, Camping World 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 Camping World will offset losses from the drop in Camping World's long position.

The idea behind Group 1 Automotive and Camping World Holdings 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.

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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.