Correlation Between Mister Car and Rollins

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

Diversification Opportunities for Mister Car and Rollins

0.81

Correlation Coefficient

Mister Car  Rollins

Very poor diversification

The 3 months correlation between Mister and Rollins is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Mister Car Wash, and Rollins in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rollins 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 Rollins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rollins has no effect on the direction of Mister Car i.e., Mister Car and Rollins go up and down completely randomly.

Pair Corralation between Mister Car and Rollins

Considering the 90-day investment horizon Mister Car is expected to generate 1.27 times less return on investment than Rollins. In addition to that, Mister Car is 1.99 times more volatile than Rollins. It trades about 0.08 of its total potential returns per unit of risk. Rollins is currently generating about 0.2 per unit of volatility. If you would invest  4,626  in Rollins on December 28, 2024 and sell it today you would earn a total of  680.00  from holding Rollins or generate 14.7% return on investment over 90 days.

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

Mister Car Wash,  vs.  Rollins

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.

Rollins

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Rollins are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Rollins disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mister Car and Rollins

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

The idea behind Mister Car Wash, and Rollins 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.