Correlation Between Vroom, Common and CarMax

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

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

Diversification Opportunities for Vroom, Common and CarMax

-0.62

Correlation Coefficient

Vroom, Common  CarMax

Excellent diversification

The 3 months correlation between Vroom, and CarMax is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Vroom, Common Stock and CarMax Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CarMax Inc and Vroom, Common 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 Vroom, Common Stock 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 Vroom, Common i.e., Vroom, Common and CarMax go up and down completely randomly.

Pair Corralation between Vroom, Common and CarMax

Considering the 90-day investment horizon Vroom, Common Stock is expected to generate 29.09 times more return on investment than CarMax. However, Vroom, Common is 29.09 times more volatile than CarMax Inc. It trades about 0.13 of its potential returns per unit of risk. CarMax Inc is currently generating about -0.09 per unit of risk. If you would invest  528.00  in Vroom, Common Stock on December 27, 2024 and sell it today you would earn a total of  2,323  from holding Vroom, Common Stock or generate 439.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

Vroom, Common Stock  vs.  CarMax Inc

Vroom, Common Stock

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vroom, Common Stock are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Vroom, Common displayed solid returns over the last few months and may actually be approaching a breakup point.

CarMax Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days CarMax Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Vroom, Common and CarMax

The main advantage of trading using opposite Vroom, Common and CarMax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vroom, Common 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 Vroom, Common Stock 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 Global Correlations module to find global opportunities by holding instruments from different markets.