Correlation Between Bondbloxx ETF and CarMax

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

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

Diversification Opportunities for Bondbloxx ETF and CarMax

0.27

Correlation Coefficient

Bondbloxx ETF  CarMax

Modest diversification

The 3 months correlation between Bondbloxx and CarMax is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Bondbloxx ETF Trust and CarMax Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CarMax Inc and Bondbloxx ETF 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 Bondbloxx ETF Trust 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 Bondbloxx ETF i.e., Bondbloxx ETF and CarMax go up and down completely randomly.

Pair Corralation between Bondbloxx ETF and CarMax

Given the investment horizon of 90 days Bondbloxx ETF Trust is expected to under-perform the CarMax. But the etf apears to be less risky and, when comparing its historical volatility, Bondbloxx ETF Trust is 18.11 times less risky than CarMax. The etf trades about -0.02 of its potential returns per unit of risk. The CarMax Inc is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  7,628  in CarMax Inc on September 12, 2024 and sell it today you would earn a total of  1,092  from holding CarMax Inc or generate 14.32% return on investment over 90 days.

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

Bondbloxx ETF Trust  vs.  CarMax Inc

Bondbloxx ETF Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bondbloxx ETF Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Bondbloxx ETF is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

CarMax Inc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CarMax Inc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating primary indicators, CarMax showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bondbloxx ETF and CarMax

The main advantage of trading using opposite Bondbloxx ETF and CarMax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bondbloxx ETF 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 Bondbloxx ETF Trust 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.