Correlation Between Mister Car and Carriage Services

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

By analyzing existing cross correlation between Mister Car Wash, and Carriage Services, you can compare the effects of market volatilities on Mister Car and Carriage Services 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 Mister Car with a short position of Carriage Services. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mister Car and Carriage Services.

Diversification Opportunities for Mister Car and Carriage Services

-0.12

Correlation Coefficient

Mister Car  Carriage Services

Good diversification

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

Pair Corralation between Mister Car and Carriage Services

Considering the 90-day investment horizon Mister Car Wash, is expected to generate 1.63 times more return on investment than Carriage Services. However, Mister Car is 1.63 times more volatile than Carriage Services. It trades about 0.08 of its potential returns per unit of risk. Carriage Services is currently generating about -0.02 per unit of risk. If you would invest  719.00  in Mister Car Wash, on December 29, 2024 and sell it today you would earn a total of  72.00  from holding Mister Car Wash, or generate 10.01% return on investment over 90 days.

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

Mister Car Wash,  vs.  Carriage Services

Mister Car Wash,

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Mister Car Wash, are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, Mister Car may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Carriage Services

Risk-Adjusted Performance

Very Weak

Over the last 90 days Carriage Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Carriage Services is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Mister Car and Carriage Services

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

The idea behind Mister Car Wash, and Carriage Services 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.