Correlation Between Mulberry Group and CarMax

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

By analyzing existing cross correlation between Mulberry Group PLC and CarMax Inc, you can compare the effects of market volatilities on Mulberry Group and CarMax 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 Mulberry Group with a short position of CarMax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mulberry Group and CarMax.

Diversification Opportunities for Mulberry Group and CarMax

-0.63

Correlation Coefficient

Mulberry Group  CarMax

Excellent diversification

The 3 months correlation between Mulberry and CarMax is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Mulberry Group PLC and CarMax Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CarMax Inc and Mulberry Group 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 Mulberry Group PLC are associated (or correlated) with CarMax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CarMax Inc has no effect on the direction of Mulberry Group i.e., Mulberry Group and CarMax go up and down completely randomly.

Pair Corralation between Mulberry Group and CarMax

Assuming the 90 days trading horizon Mulberry Group is expected to generate 64.0 times less return on investment than CarMax. In addition to that, Mulberry Group is 1.92 times more volatile than CarMax Inc. It trades about 0.0 of its total potential returns per unit of risk. CarMax Inc is currently generating about 0.06 per unit of volatility. If you would invest  7,251  in CarMax Inc on September 24, 2024 and sell it today you would earn a total of  1,077  from holding CarMax Inc or generate 14.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.22%
Values	Daily Returns

Mulberry Group PLC  vs.  CarMax Inc

Mulberry Group PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mulberry Group PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Mulberry Group is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

CarMax Inc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CarMax Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, CarMax may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Mulberry Group and CarMax

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

The idea behind Mulberry Group PLC and CarMax Inc 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.