Correlation Between Copart and CBIZ

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

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

Diversification Opportunities for Copart and CBIZ

0.86

Correlation Coefficient

Copart  CBIZ

Very poor diversification

The 3 months correlation between Copart and CBIZ is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Copart Inc and CBIZ Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CBIZ Inc and Copart 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 Copart Inc are associated (or correlated) with CBIZ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CBIZ Inc has no effect on the direction of Copart i.e., Copart and CBIZ go up and down completely randomly.

Pair Corralation between Copart and CBIZ

Given the investment horizon of 90 days Copart Inc is expected to generate 0.8 times more return on investment than CBIZ. However, Copart Inc is 1.25 times less risky than CBIZ. It trades about 0.1 of its potential returns per unit of risk. CBIZ Inc is currently generating about 0.07 per unit of risk. If you would invest  3,099  in Copart Inc on September 25, 2024 and sell it today you would earn a total of  2,808  from holding Copart Inc or generate 90.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.8%
Values	Daily Returns

Copart Inc  vs.  CBIZ Inc

Copart Inc

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Copart Inc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Copart may actually be approaching a critical reversion point that can send shares even higher in January 2025.

CBIZ Inc

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CBIZ Inc are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile fundamental drivers, CBIZ showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Copart and CBIZ

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

The idea behind Copart Inc and CBIZ 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.