Correlation Between Plus500 and Carvana Co

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Can any of the company-specific risk be diversified away by investing in both Plus500 and Carvana Co 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 Plus500 and Carvana Co into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Plus500 and Carvana Co Cl, you can compare the effects of market volatilities on Plus500 and Carvana Co 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 Plus500 with a short position of Carvana Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of Plus500 and Carvana Co.

Diversification Opportunities for Plus500 and Carvana Co

0.12
  Correlation Coefficient

Average diversification

The 3 months correlation between Plus500 and Carvana is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Plus500 and Carvana Co Cl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carvana Co Cl and Plus500 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 Plus500 are associated (or correlated) with Carvana Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carvana Co Cl has no effect on the direction of Plus500 i.e., Plus500 and Carvana Co go up and down completely randomly.

Pair Corralation between Plus500 and Carvana Co

Assuming the 90 days horizon Plus500 is expected to generate 8.68 times less return on investment than Carvana Co. But when comparing it to its historical volatility, Plus500 is 4.91 times less risky than Carvana Co. It trades about 0.22 of its potential returns per unit of risk. Carvana Co Cl is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest  2,209  in Carvana Co Cl on May 10, 2022 and sell it today you would earn a total of  2,437  from holding Carvana Co Cl or generate 110.32% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Plus500  vs.  Carvana Co Cl

 Performance (%) 
       Timeline  
Plus500 
Plus500 Performance
11 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Plus500 are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal basic indicators, Plus500 may actually be approaching a critical reversion point that can send shares even higher in September 2022.

Plus500 Price Channel

Carvana Co Cl 
Carvana Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Carvana Co Cl are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, Carvana Co sustained solid returns over the last few months and may actually be approaching a breakup point.

Carvana Price Channel

Plus500 and Carvana Co Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Plus500 and Carvana Co

The main advantage of trading using opposite Plus500 and Carvana Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Plus500 position performs unexpectedly, Carvana Co 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 Co will offset losses from the drop in Carvana Co's long position.
The idea behind Plus500 and Carvana Co Cl 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.
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 Probability Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.

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