Correlation Between Rush Enterprises and Cango

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

By analyzing existing cross correlation between Rush Enterprises B and Cango Inc, you can compare the effects of market volatilities on Rush Enterprises and Cango 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 Cango. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rush Enterprises and Cango.

Diversification Opportunities for Rush Enterprises and Cango

0.9

Correlation Coefficient

Rush Enterprises  Cango

Almost no diversification

The 3 months correlation between Rush and Cango is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Rush Enterprises B and Cango Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cango Inc 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 B are associated (or correlated) with Cango. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cango Inc has no effect on the direction of Rush Enterprises i.e., Rush Enterprises and Cango go up and down completely randomly.

Pair Corralation between Rush Enterprises and Cango

Assuming the 90 days horizon Rush Enterprises is expected to generate 4.29 times less return on investment than Cango. But when comparing it to its historical volatility, Rush Enterprises B is 2.53 times less risky than Cango. It trades about 0.15 of its potential returns per unit of risk. Cango Inc is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  168.00  in Cango Inc on August 31, 2024 and sell it today you would earn a total of  240.00  from holding Cango Inc or generate 142.86% return on investment over 90 days.

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

Rush Enterprises B  vs.  Cango Inc

Rush Enterprises B

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Rush Enterprises B are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent technical indicators, Rush Enterprises sustained solid returns over the last few months and may actually be approaching a breakup point.

Cango Inc

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cango Inc are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Cango reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Rush Enterprises and Cango

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

The idea behind Rush Enterprises B and Cango 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.