Correlation Between Carvana and SunCar Technology

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

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

Diversification Opportunities for Carvana and SunCar Technology

-0.22

Correlation Coefficient

Carvana  SunCar Technology

Very good diversification

The 3 months correlation between Carvana and SunCar is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Carvana Co and SunCar Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SunCar Technology and Carvana 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 Carvana Co are associated (or correlated) with SunCar Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SunCar Technology has no effect on the direction of Carvana i.e., Carvana and SunCar Technology go up and down completely randomly.

Pair Corralation between Carvana and SunCar Technology

Given the investment horizon of 90 days Carvana Co is expected to generate 0.75 times more return on investment than SunCar Technology. However, Carvana Co is 1.33 times less risky than SunCar Technology. It trades about 0.25 of its potential returns per unit of risk. SunCar Technology Group is currently generating about 0.0 per unit of risk. If you would invest  15,290  in Carvana Co on September 16, 2024 and sell it today you would earn a total of  9,535  from holding Carvana Co or generate 62.36% return on investment over 90 days.

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

Carvana Co  vs.  SunCar Technology Group

Carvana

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Carvana Co are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Carvana sustained solid returns over the last few months and may actually be approaching a breakup point.

SunCar Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SunCar Technology Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, SunCar Technology is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Carvana and SunCar Technology

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

The idea behind Carvana Co and SunCar Technology Group 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.