Correlation Between Rush Enterprises and Group 1

Can any of the company-specific risk be diversified away by investing in both Rush Enterprises and Group 1 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 Rush Enterprises and Group 1 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Rush Enterprises A and Group 1 Automotive, you can compare the effects of market volatilities on Rush Enterprises and Group 1 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 Rush Enterprises with a short position of Group 1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rush Enterprises and Group 1.

Diversification Opportunities for Rush Enterprises and Group 1

0.38

Correlation Coefficient

Rush Enterprises  Group 1

Weak diversification

The 3 months correlation between Rush and Group is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Rush Enterprises A and Group 1 Automotive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Group 1 Automotive and Rush Enterprises 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 Rush Enterprises A are associated (or correlated) with Group 1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Group 1 Automotive has no effect on the direction of Rush Enterprises i.e., Rush Enterprises and Group 1 go up and down completely randomly.

Pair Corralation between Rush Enterprises and Group 1

Assuming the 90 days horizon Rush Enterprises A is expected to under-perform the Group 1. In addition to that, Rush Enterprises is 1.41 times more volatile than Group 1 Automotive. It trades about -0.11 of its total potential returns per unit of risk. Group 1 Automotive is currently generating about -0.01 per unit of volatility. If you would invest  46,194  in Group 1 Automotive on December 1, 2024 and sell it today you would lose (236.00) from holding Group 1 Automotive or give up 0.51% of portfolio value over 90 days.

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

Rush Enterprises A  vs.  Group 1 Automotive

Rush Enterprises A

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rush Enterprises A has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical indicators, Rush Enterprises is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Group 1 Automotive

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Group 1 Automotive are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Group 1 may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Rush Enterprises and Group 1

The main advantage of trading using opposite Rush Enterprises and Group 1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rush Enterprises position performs unexpectedly, Group 1 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 Group 1 will offset losses from the drop in Group 1's long position.

The idea behind Rush Enterprises A and Group 1 Automotive 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.