Correlation Between Uniper SE and CarMax

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

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

Diversification Opportunities for Uniper SE and CarMax

-0.62

Correlation Coefficient

Uniper SE  CarMax

Excellent diversification

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

Pair Corralation between Uniper SE and CarMax

Assuming the 90 days trading horizon Uniper SE is expected to under-perform the CarMax. In addition to that, Uniper SE is 1.1 times more volatile than CarMax Inc. It trades about -0.21 of its total potential returns per unit of risk. CarMax Inc is currently generating about 0.11 per unit of volatility. If you would invest  7,508  in CarMax Inc on September 25, 2024 and sell it today you would earn a total of  992.00  from holding CarMax Inc or generate 13.21% return on investment over 90 days.

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

Uniper SE  vs.  CarMax Inc

Uniper SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Uniper SE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

CarMax Inc

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CarMax Inc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, CarMax unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Uniper SE and CarMax

The main advantage of trading using opposite Uniper SE and CarMax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Uniper SE 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 Uniper SE 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 CEOs Directory module to screen CEOs from public companies around the world.