Correlation Between Jd ComInc and Carvana

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

By analyzing existing cross correlation between Jd ComInc and Carvana Co, you can compare the effects of market volatilities on Jd ComInc and Carvana 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 Jd ComInc with a short position of Carvana. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jd ComInc and Carvana.

Diversification Opportunities for Jd ComInc and Carvana

0.69

Correlation Coefficient

Jd ComInc  Carvana

Poor diversification

The 3 months correlation between JDCMF and Carvana is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Jd ComInc and Carvana Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carvana and Jd ComInc 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 Jd ComInc are associated (or correlated) with Carvana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carvana has no effect on the direction of Jd ComInc i.e., Jd ComInc and Carvana go up and down completely randomly.

Pair Corralation between Jd ComInc and Carvana

Assuming the 90 days horizon Jd ComInc is expected to generate 1.02 times more return on investment than Carvana. However, Jd ComInc is 1.02 times more volatile than Carvana Co. It trades about 0.14 of its potential returns per unit of risk. Carvana Co is currently generating about -0.28 per unit of risk. If you would invest  1,295  in Jd ComInc on January 26, 2024 and sell it today you would earn a total of  115.00  from holding Jd ComInc or generate 8.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Jd ComInc  vs.  Carvana Co

Jd ComInc

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jd ComInc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak primary indicators, Jd ComInc reported solid returns over the last few months and may actually be approaching a breakup point.

Carvana

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Carvana Co are ranked lower than 14 (%) 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.

Pair Trading with Jd ComInc and Carvana

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

The idea behind Jd ComInc and Carvana Co 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.