Correlation Between Mister Car and E Home

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

Diversification Opportunities for Mister Car and E Home

-0.55

Correlation Coefficient

Mister Car  E Home

Excellent diversification

The 3 months correlation between Mister and EJH is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Mister Car Wash, and E Home Household Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on E Home Household 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 E Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of E Home Household has no effect on the direction of Mister Car i.e., Mister Car and E Home go up and down completely randomly.

Pair Corralation between Mister Car and E Home

Considering the 90-day investment horizon Mister Car Wash, is expected to under-perform the E Home. But the stock apears to be less risky and, when comparing its historical volatility, Mister Car Wash, is 8.54 times less risky than E Home. The stock trades about -0.33 of its potential returns per unit of risk. The E Home Household Service is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  74.00  in E Home Household Service on October 9, 2024 and sell it today you would earn a total of  13.00  from holding E Home Household Service or generate 17.57% return on investment over 90 days.

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

Mister Car Wash,  vs.  E Home Household Service

Mister Car Wash,

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Mister Car Wash, are ranked lower than 5 (%) 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 February 2025.

E Home Household

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in E Home Household Service are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile forward-looking indicators, E Home may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Mister Car and E Home

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

The idea behind Mister Car Wash, and E Home Household Service 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.