Correlation Between Carvana and Hypercharge Networks

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

By analyzing existing cross correlation between Carvana Co and Hypercharge Networks Corp, you can compare the effects of market volatilities on Carvana and Hypercharge Networks 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 Hypercharge Networks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carvana and Hypercharge Networks.

Diversification Opportunities for Carvana and Hypercharge Networks

-0.07

Correlation Coefficient

Carvana  Hypercharge Networks

Good diversification

The 3 months correlation between Carvana and Hypercharge is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Carvana Co and Hypercharge Networks Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hypercharge Networks Corp 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 Hypercharge Networks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hypercharge Networks Corp has no effect on the direction of Carvana i.e., Carvana and Hypercharge Networks go up and down completely randomly.

Pair Corralation between Carvana and Hypercharge Networks

Given the investment horizon of 90 days Carvana Co is expected to generate 1.12 times more return on investment than Hypercharge Networks. However, Carvana is 1.12 times more volatile than Hypercharge Networks Corp. It trades about 0.14 of its potential returns per unit of risk. Hypercharge Networks Corp is currently generating about -0.07 per unit of risk. If you would invest  1,153  in Carvana Co on January 19, 2024 and sell it today you would earn a total of  5,962  from holding Carvana Co or generate 517.09% 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.  Hypercharge Networks Corp

Carvana

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Carvana Co are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Carvana sustained solid returns over the last few months and may actually be approaching a breakup point.

Hypercharge Networks Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hypercharge Networks Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Hypercharge Networks may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Carvana and Hypercharge Networks

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

The idea behind Carvana Co and Hypercharge Networks Corp 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.