Correlation Between Rover and Mister Car

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

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

Diversification Opportunities for Rover and Mister Car

0.74

Correlation Coefficient

Rover  Mister Car

Poor diversification

The 3 months correlation between Rover and Mister is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Rover Group and Mister Car Wash in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mister Car Wash and Rover 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 Rover Group are associated (or correlated) with Mister Car. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mister Car Wash has no effect on the direction of Rover i.e., Rover and Mister Car go up and down completely randomly.

Pair Corralation between Rover and Mister Car

If you would invest  703.00  in Mister Car Wash on September 20, 2024 and sell it today you would earn a total of  16.00  from holding Mister Car Wash or generate 2.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	0.6%
Values	Daily Returns

Rover Group  vs.  Mister Car Wash

Rover Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rover Group has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Rover is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Mister Car Wash

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Mister Car Wash are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, Mister Car may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Rover and Mister Car

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

The idea behind Rover Group and Mister Car Wash 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.