Correlation Between Group 1 and RumbleON

Can any of the company-specific risk be diversified away by investing in both Group 1 and RumbleON 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 RumbleON 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 RumbleON, you can compare the effects of market volatilities on Group 1 and RumbleON 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 RumbleON. Check out your portfolio center. Please also check ongoing floating volatility patterns of Group 1 and RumbleON.

Diversification Opportunities for Group 1 and RumbleON

0.12

Correlation Coefficient

Group 1  RumbleON

Average diversification

The 3 months correlation between Group and RumbleON is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Group 1 Automotive and RumbleON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RumbleON 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 RumbleON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RumbleON has no effect on the direction of Group 1 i.e., Group 1 and RumbleON go up and down completely randomly.

Pair Corralation between Group 1 and RumbleON

Considering the 90-day investment horizon Group 1 Automotive is expected to generate 0.55 times more return on investment than RumbleON. However, Group 1 Automotive is 1.81 times less risky than RumbleON. It trades about -0.07 of its potential returns per unit of risk. RumbleON is currently generating about -0.27 per unit of risk. If you would invest  41,865  in Group 1 Automotive on December 28, 2024 and sell it today you would lose (4,269) from holding Group 1 Automotive or give up 10.2% of portfolio value over 90 days.

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

Group 1 Automotive  vs.  RumbleON

Group 1 Automotive

Risk-Adjusted Performance

Very Weak

Over the last 90 days Group 1 Automotive has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

RumbleON

Risk-Adjusted Performance

Very Weak

Over the last 90 days RumbleON has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's fundamental drivers remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Group 1 and RumbleON

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

The idea behind Group 1 Automotive and RumbleON 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.