Correlation Between Mister Car and Persimmon Plc

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

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

Diversification Opportunities for Mister Car and Persimmon Plc

-0.88

Correlation Coefficient

Mister Car  Persimmon Plc

Pay attention - limited upside

The 3 months correlation between Mister and Persimmon is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Mister Car Wash and Persimmon Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Persimmon Plc and Mister Car 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 Mister Car Wash are associated (or correlated) with Persimmon Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Persimmon Plc has no effect on the direction of Mister Car i.e., Mister Car and Persimmon Plc go up and down completely randomly.

Pair Corralation between Mister Car and Persimmon Plc

Considering the 90-day investment horizon Mister Car Wash is expected to generate 1.18 times more return on investment than Persimmon Plc. However, Mister Car is 1.18 times more volatile than Persimmon Plc. It trades about 0.14 of its potential returns per unit of risk. Persimmon Plc is currently generating about -0.17 per unit of risk. If you would invest  627.00  in Mister Car Wash on September 12, 2024 and sell it today you would earn a total of  146.00  from holding Mister Car Wash or generate 23.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Mister Car Wash  vs.  Persimmon Plc

Mister Car Wash

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mister Car Wash are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, Mister Car showed solid returns over the last few months and may actually be approaching a breakup point.

Persimmon Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Persimmon Plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's primary indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Mister Car and Persimmon Plc

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

The idea behind Mister Car Wash and Persimmon Plc 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.