Correlation Between CarMax and Fibra Mty
Can any of the company-specific risk be diversified away by investing in both CarMax and Fibra Mty 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 CarMax and Fibra Mty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CarMax Inc and Fibra Mty SAPI, you can compare the effects of market volatilities on CarMax and Fibra Mty 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 CarMax with a short position of Fibra Mty. Check out your portfolio center. Please also check ongoing floating volatility patterns of CarMax and Fibra Mty.
Diversification Opportunities for CarMax and Fibra Mty
Very poor diversification
The 3 months correlation between CarMax and Fibra is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding CarMax Inc and Fibra Mty SAPI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fibra Mty SAPI and CarMax 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 CarMax Inc are associated (or correlated) with Fibra Mty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fibra Mty SAPI has no effect on the direction of CarMax i.e., CarMax and Fibra Mty go up and down completely randomly.
Pair Corralation between CarMax and Fibra Mty
Assuming the 90 days trading horizon CarMax Inc is expected to under-perform the Fibra Mty. But the stock apears to be less risky and, when comparing its historical volatility, CarMax Inc is 1.64 times less risky than Fibra Mty. The stock trades about -0.22 of its potential returns per unit of risk. The Fibra Mty SAPI is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,071 in Fibra Mty SAPI on October 11, 2024 and sell it today you would earn a total of 14.00 from holding Fibra Mty SAPI or generate 1.31% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
CarMax Inc vs. Fibra Mty SAPI
Performance |
Timeline |
CarMax Inc |
Fibra Mty SAPI |
CarMax and Fibra Mty Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CarMax and Fibra Mty
The main advantage of trading using opposite CarMax and Fibra Mty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CarMax position performs unexpectedly, Fibra Mty 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 Fibra Mty will offset losses from the drop in Fibra Mty's long position.CarMax vs. The Select Sector | CarMax vs. Promotora y Operadora | CarMax vs. iShares Global Timber | CarMax vs. SPDR Series Trust |
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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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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