Correlation Between Winmark and Copart
Can any of the company-specific risk be diversified away by investing in both Winmark and Copart 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 Winmark and Copart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Winmark and Copart Inc, you can compare the effects of market volatilities on Winmark and Copart 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 Winmark with a short position of Copart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Winmark and Copart.
Diversification Opportunities for Winmark and Copart
Excellent diversification
The 3 months correlation between Winmark and Copart is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Winmark and Copart Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Copart Inc and Winmark 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 Winmark are associated (or correlated) with Copart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Copart Inc has no effect on the direction of Winmark i.e., Winmark and Copart go up and down completely randomly.
Pair Corralation between Winmark and Copart
Given the investment horizon of 90 days Winmark is expected to generate 1.86 times more return on investment than Copart. However, Winmark is 1.86 times more volatile than Copart Inc. It trades about 0.13 of its potential returns per unit of risk. Copart Inc is currently generating about -0.19 per unit of risk. If you would invest 35,095 in Winmark on January 19, 2024 and sell it today you would earn a total of 1,755 from holding Winmark or generate 5.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Winmark vs. Copart Inc
Performance |
| Timeline |
| Winmark |
| Copart Inc |
Winmark and Copart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Winmark and Copart
The main advantage of trading using opposite Winmark and Copart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Winmark position performs unexpectedly, Copart 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 Copart will offset losses from the drop in Copart's long position.The idea behind Winmark and Copart 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.| Copart vs. Global Payments | Copart vs. ABM Industries Incorporated | Copart vs. Thomson Reuters Corp | Copart vs. Aramark Holdings |
Check out your portfolio center.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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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