Correlation Between Carvana and SPDR Russell
Can any of the company-specific risk be diversified away by investing in both Carvana and SPDR Russell 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 SPDR Russell into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carvana Co and SPDR Russell 1000, you can compare the effects of market volatilities on Carvana and SPDR Russell 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 SPDR Russell. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carvana and SPDR Russell.
Diversification Opportunities for Carvana and SPDR Russell
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Carvana and SPDR is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Carvana Co and SPDR Russell 1000 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Russell 1000 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 SPDR Russell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Russell 1000 has no effect on the direction of Carvana i.e., Carvana and SPDR Russell go up and down completely randomly.
Pair Corralation between Carvana and SPDR Russell
Given the investment horizon of 90 days Carvana Co is expected to under-perform the SPDR Russell. In addition to that, Carvana is 3.78 times more volatile than SPDR Russell 1000. It trades about -0.23 of its total potential returns per unit of risk. SPDR Russell 1000 is currently generating about -0.19 per unit of volatility. If you would invest 11,358 in SPDR Russell 1000 on January 25, 2024 and sell it today you would lose (371.70) from holding SPDR Russell 1000 or give up 3.27% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Carvana Co vs. SPDR Russell 1000
Performance |
Timeline |
Carvana |
SPDR Russell 1000 |
Carvana and SPDR Russell Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Carvana and SPDR Russell
The main advantage of trading using opposite Carvana and SPDR Russell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carvana position performs unexpectedly, SPDR Russell 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 SPDR Russell will offset losses from the drop in SPDR Russell's long position.Carvana vs. Cazoo Group | Carvana vs. CarMax Inc | Carvana vs. U Power Limited | Carvana vs. SunCar Technology Group |
SPDR Russell vs. SPDR Russell 1000 | SPDR Russell vs. SPDR MSCI USA | SPDR Russell vs. SPDR MSCI EAFE | SPDR Russell vs. SPDR SSGA Large |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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