Correlation Between Mister Car and Service International

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

Diversification Opportunities for Mister Car and Service International

0.19

Correlation Coefficient

Mister Car  Service International

Average diversification

The 3 months correlation between Mister and Service is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Mister Car Wash, and Service International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Service International 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 Service International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Service International has no effect on the direction of Mister Car i.e., Mister Car and Service International go up and down completely randomly.

Pair Corralation between Mister Car and Service International

Considering the 90-day investment horizon Mister Car Wash, is expected to generate 1.26 times more return on investment than Service International. However, Mister Car is 1.26 times more volatile than Service International. It trades about 0.08 of its potential returns per unit of risk. Service International is currently generating about 0.01 per unit of risk. If you would invest  719.00  in Mister Car Wash, on December 28, 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 Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Mister Car Wash,  vs.  Service International

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.

Service International

Risk-Adjusted Performance

Weak

Over the last 90 days Service International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, Service International is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Mister Car and Service International

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

The idea behind Mister Car Wash, and Service International 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.

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 Bonds Directory module to find actively traded corporate debentures issued by US companies.