Correlation Between CAVA Group, and Auburn National

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

By analyzing existing cross correlation between CAVA Group, and Auburn National Bancorporation, you can compare the effects of market volatilities on CAVA Group, and Auburn National 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 CAVA Group, with a short position of Auburn National. Check out your portfolio center. Please also check ongoing floating volatility patterns of CAVA Group, and Auburn National.

Diversification Opportunities for CAVA Group, and Auburn National

0.24

Correlation Coefficient

CAVA Group,  Auburn National

Modest diversification

The 3 months correlation between CAVA and Auburn is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding CAVA Group, and Auburn National Bancorp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auburn National Banc and CAVA Group, 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 CAVA Group, are associated (or correlated) with Auburn National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auburn National Banc has no effect on the direction of CAVA Group, i.e., CAVA Group, and Auburn National go up and down completely randomly.

Pair Corralation between CAVA Group, and Auburn National

Given the investment horizon of 90 days CAVA Group, is expected to generate 6.27 times less return on investment than Auburn National. But when comparing it to its historical volatility, CAVA Group, is 1.0 times less risky than Auburn National. It trades about 0.02 of its potential returns per unit of risk. Auburn National Bancorporation is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,982  in Auburn National Bancorporation on September 15, 2024 and sell it today you would earn a total of  366.00  from holding Auburn National Bancorporation or generate 18.47% return on investment over 90 days.

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

CAVA Group,  vs.  Auburn National Bancorp.

CAVA Group,

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CAVA Group, are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, CAVA Group, is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Auburn National Banc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Auburn National Bancorporation are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting fundamental drivers, Auburn National displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CAVA Group, and Auburn National

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

The idea behind CAVA Group, and Auburn National Bancorporation 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.