Carvana Stock Volatility

CVNA -  USA Stock  

USD 135.65  22.34  14.14%

Carvana Co Cl secures Sharpe Ratio (or Efficiency) of -0.26, which signifies that the company had -0.26% of return per unit of risk over the last 3 months. Macroaxis standpoint towards foreseeing the risk of any stock is to look at both systematic and unsystematic factors of the business, including all available market data and technical indicators. Carvana Co Cl exposes twenty-eight different technical indicators, which can help you to evaluate volatility that cannot be diversified away. Please be advised to confirm Carvana Co Cl risk adjusted performance of (0.20), and Mean Deviation of 2.99 to double-check the risk estimate we provide.

Carvana Volatility 

 
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Carvana Co Stock volatility depicts how high the prices fluctuate around the mean (or its average) price. In other words, it is a statistical measure of the distribution of Carvana daily returns, and it is calculated using variance and standard deviation. We also use Carvana's beta, its sensitivity to the market, as well as its odds of financial distress to provide a more practical estimation of Carvana Co volatility.

720 Days Market Risk

Very steady

Chance of Distress

720 Days Economic Sensitivity

Responds to the market
Since volatility provides investors with entry points to take advantage of stock prices, companies, such as Carvana Co can benefit from it. Downward market volatility can be a perfect environment for investors who play the long game. Here, they may decide to buy additional stocks of Carvana Co at lower prices. For example, an investor can purchase Carvana stock that has halved in price over a short period. This will lower your average cost per share, thereby improving your portfolio's performance when the markets normalize. Similarly, when the prices of Carvana Co's stock rises, investors can sell out and invest the proceeds in other equities with better opportunities. Investing when markets are volatile with better valuations will accord both investors and companies the opportunity to generate better long-term returns.

Carvana Co Market Sensitivity And Downside Risk

Carvana Co's beta coefficient measures the volatility of Carvana stock compared to the systematic risk of the entire stock market represented by your selected benchmark. In mathematical terms, beta represents the slope of the line through a regression of data points where each of these points represents Carvana stock's returns against your selected market. In other words, Carvana Co's beta of 1.32 provides an investor with an approximation of how much risk Carvana Co stock can potentially add to one of your existing portfolios.
Let's try to break down what Carvana's beta means in this case. As the market goes up, the company is expected to outperform it. However, if the market returns are negative, Carvana Co will likely underperform.
3 Months Beta |Analyze Carvana Co Cl Demand Trend
Check current 90 days Carvana Co correlation with market (DOW)

Carvana Beta

    
  1.32  
Carvana standard deviation measures the daily dispersion of prices over your selected time horizon relative to its mean. Typical volatile equity has a high standard deviation, while the deviation of a stable instrument is usually low. As a downside, the standard deviation calculates all uncertainty as risk, even when it is in your favor, such as above-average returns.

Standard Deviation

    
  4.19  
It is essential to understand the difference between upside risk (as represented by Carvana Co's standard deviation) and the downside risk, which can be measured by semi-deviation or downside deviation of Carvana Co stock's daily returns or price. Since the actual investment returns on holding a position in Carvana Co stock tend to have a non-normal distribution, there will be different probabilities for losses than for gains. The likelihood of losses is reflected in the downside risk of an investment in Carvana Co.

Carvana Co Implied Volatility

    
  130.53  
Carvana Co's implied volatility exposes the market's sentiment of Carvana Co Cl stock's possible movements over time. However, it does not forecast the overall direction of its price. In a nutshell, if Carvana Co's implied volatility is high, the market thinks the stock has potential for high price swings in either direction. On the other hand, the low implied volatility suggests that Carvana Co stock will not fluctuate a lot when Carvana Co's options are near their expiration.

Carvana Co Cl Stock Volatility Analysis

Volatility refers to the frequency at which Carvana Co stock price increases or decreases within a specified period. These fluctuations usually indicate the level of risk that's associated with Carvana Co's price changes. Investors will then calculate the volatility of Carvana Co's stock to predict their future moves. A stock that has erratic price changes quickly hits new highs, and lows are considered highly volatile. A stock with relatively stable price changes has low volatility. A highly volatile stock is riskier, but the risk cuts both ways. Investing in highly volatile security can either be highly successful, or you may experience significant failure. There are two main types of Carvana Co's volatility:

Historical Volatility

This type of stock volatility measures Carvana Co's fluctuations based on previous trends. It's commonly used to predict Carvana Co's future behavior based on its past. However, it cannot conclusively determine the future direction of the stock.

Implied Volatility

This type of volatility provides a positive outlook on future price fluctuations for Carvana Co's current market price. This means that the stock will return to its initially predicted market price.
Transformation
The output start index for this execution was zero with a total number of output elements of sixty-one. Carvana Co Cl Average Price is the average of the sum of open, high, low and close daily prices of a bar. It can be used to smooth an indicator that normally takes just the closing price as input. View also all equity analysis or get more info about average price price transform indicator.

Carvana Co Projected Return Density Against Market

Given the investment horizon of 90 days the stock has the beta coefficient of 1.3198 suggesting as the benchmark fluctuates upward, the company is expected to outperform it on average. However, if the benchmark returns are projected to be negative, Carvana Co will likely underperform.
Most traded equities are subject to two types of risk - systematic (i.e., market) and unsystematic (i.e., nonmarket or company-specific) risk. Unsystematic risk is the risk that events specific to Carvana Co or Consumer Cyclical sector will adversely affect the stock's price. This type of risk can be diversified away by owning several different stocks in different industries whose stock prices have shown a small correlation to each other. On the other hand, systematic risk is the risk that Carvana Co stock's price will be affected by overall stock market movements and cannot be diversified away. So, no matter how many positions you have, you cannot eliminate market risk. However, you can measure a Carvana stock's historical response to market movements and buy it if you are comfortable with its volatility direction. Beta and standard deviation are two commonly used measures to help you make the right decision.
The company has a negative alpha, implying that the risk taken by holding this instrument is not justified. Carvana Co Cl is significantly underperforming DOW.
 Predicted Return Density 
      Returns 
Carvana Co's volatility is measured either by using standard deviation or beta. Standard deviation will reflect the average amount of how Carvana Co stock's price will differ from the mean after some time.To get its calculation, you should first determine the mean price during the specified period then subtract that from each price point.

What Drives a Company's Stock Price Volatility?

Several factors can influence a company's stock volatility:

Industry

Specific events can influence volatility within a particular industry. For instance, a significant weather upheaval in a crucial oil-production site may cause oil prices to increase in the oil sector. The direct result will be the rise in the stock price of oil distribution companies. Similarly, any government regulation in a specific industry could negatively influence stock prices due to increased regulations on compliance that may impact the company's future earnings and growth.

Political and Economic environment

When governments make significant decisions regarding trade agreements, policies, and legislation regarding specific industries, they will influence stock prices. Everything from speeches to elections may influence investors, who can directly influence the stock prices in any particular industry. The prevailing economic situation also plays a significant role in stock prices. When the economy is doing well, investors will have a positive reaction and hence, better stock prices and vice versa.

The Company's Performance

Sometimes volatility will only affect an individual company. For example, a revolutionary product launch or strong earnings report may attract many investors to purchase the company. This positive attention will raise the company's stock price. In contrast, product recalls and data breaches may negatively influence a company's stock prices.

Carvana Co Stock Risk Measures

Most traded equities are subject to two types of risk - systematic (i.e., market) and unsystematic (i.e., nonmarket or company-specific) risk. Unsystematic risk is the risk that events specific to Carvana Co or Consumer Cyclical sector will adversely affect the stock's price. This type of risk can be diversified away by owning several different stocks in different industries whose stock prices have shown a small correlation to each other. On the other hand, systematic risk is the risk that Carvana Co stock's price will be affected by overall stock market movements and cannot be diversified away. So, no matter how many positions you have, you cannot eliminate market risk. However, you can measure a Carvana stock's historical response to market movements and buy it if you are comfortable with its volatility direction. Beta and standard deviation are two commonly used measures to help you make the right decision.
Given the investment horizon of 90 days the coefficient of variation of Carvana Co is -379.49. The daily returns are distributed with a variance of 17.53 and standard deviation of 4.19. The mean deviation of Carvana Co Cl is currently at 3.02. For similar time horizon, the selected benchmark (DOW) has volatility of 0.83
α
Alpha over DOW
-0.99
β
Beta against DOW1.32
σ
Overall volatility
4.19
Ir
Information ratio -0.24

Carvana Co Stock Return Volatility

Carvana Co historical daily return volatility represents how much Carvana Co stock's price daily returns swing around its mean daily price change - it is a statistical measure of its dispersion of returns. The company inherits 4.1873% risk (volatility on return distribution) over the 90 days horizon. By contrast, DOW inherits 0.8379% risk (volatility on return distribution) over the 90 days horizon.
 Performance (%) 
      Timeline 

About Carvana Co Volatility

Volatility is a rate at which the price of Carvana Co or any other equity instrument increases or decreases for a given set of returns. It is measured by calculating the standard deviation of the annualized returns over a given period of time and shows the range to which the price of Carvana Co may increase or decrease. In other words, similar to Carvana's beta indicator, it measures the risk of Carvana Co and helps estimate the fluctuations that may happen in a short period of time. So if prices of Carvana Co fluctuate rapidly in a short time span, it is termed to have high volatility, and if it swings slowly in a more extended period, it is understood to have low volatility.
Please read more on our technical analysis page.
Last ReportedProjected for 2022
Market Capitalization47.3 B51.1 B
Carvana Co., together with its subsidiaries, operates an e-commerce platform for buying and selling used cars in the United States. The company was founded in 2012 and is headquartered in Tempe, Arizona. Carvana Co operates under Internet Retail classification in the United States and is traded on New York Stock Exchange. It employs 10400 people.

Nearest Carvana long CALL Option Payoff at Expiration

Carvana Co's implied volatility is one of the determining factors in the pricing options written on Carvana Co Cl. Implied volatility approximates the future value of Carvana Cousing the option's current value. Options with high implied volatility have higher premiums and can be used to hedge the downside of investing in Carvana Co Cl over a specific time period.
View All Carvana options
2022-01-28 CALL at $75.0 is a CALL option contract on Carvana Co's common stock with a strick price of 75.0 expiring on 2022-01-28. The contract was not traded in recent days and, as of today, has 5 days remaining before the expiration. The option is currently trading at a bid price of $57.15, and an ask price of $65.25. The implied volatility as of the 23rd of January is 244.6801.
 Profit 
Share
      Carvana Co Price At Expiration 

Carvana Co Investment Opportunity

Carvana Co Cl has a volatility of 4.19 and is 4.99 times more volatile than DOW. 36  of all equities and portfolios are less risky than Carvana Co. Compared to the overall equity markets, volatility of historical daily returns of Carvana Co Cl is lower than 36 () of all global equities and portfolios over the last 90 days. Use Carvana Co Cl to protect your portfolios against small market fluctuations. The stock experiences a very speculative upward sentiment. Check odds of Carvana Co to be traded at $128.87 in 90 days. . Let's try to break down what Carvana's beta means in this case. As the market goes up, the company is expected to outperform it. However, if the market returns are negative, Carvana Co will likely underperform.

Modest diversification

The correlation between Carvana Co Cl and DJI is Modest diversification for selected investment horizon. Overlapping area represents the amount of risk that can be diversified away by holding Carvana Co Cl and DJI in the same portfolio assuming nothing else is changed.

Carvana Co Additional Risk Indicators

The analysis of Carvana Co's secondary risk indicators is one of the essential steps in making a buy or sell decision. The process involves identifying the amount of risk involved in Carvana Co's investment and either accepting that risk or mitigating it. Along with some common measures of Carvana Co stock risk such as standard deviation, beta, or value at risk, we also provide a set of secondary indicators that can assist in the individual investment decision or help in hedging the risk of your existing portfolios.
Risk Adjusted Performance(0.20)
Market Risk Adjusted Performance(0.80)
Mean Deviation2.99
Coefficient Of Variation(393.56)
Standard Deviation4.18
Variance17.43
Information Ratio(0.24)
Please note, the risk measures we provide can be used independently or collectively to perform a risk assessment. When comparing two potential stock investments, we recommend comparing similar equities with homogenous growth potential and valuation from related markets to determine which investment holds the most risk.

Carvana Co Suggested Diversification Pairs

Pair trading is one of the very effective strategies used by professional day traders and hedge funds capitalizing on short-time and mid-term market inefficiencies. The approach is based on the fact that the ratio of prices of two correlating shares is long-term stable and oscillates around the average value. If the correlation ratio comes outside the common area, you can speculate with a high success rate that the ratio will return to the mean value and collect a profit.
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The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against Carvana Co as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. Carvana Co's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, Carvana Co's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to Carvana Co Cl.
Continue to Trending Equities. Note that the Carvana Co Cl information on this page should be used as a complementary analysis to other Carvana Co's statistical models used to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.

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When running Carvana Co Cl price analysis, check to measure Carvana Co's market volatility, profitability, liquidity, solvency, efficiency, growth potential, financial leverage, and other vital indicators. We have many different tools that can be utilized to determine how healthy Carvana Co is operating at the current time. Most of Carvana Co's value examination focuses on studying past and present price action to predict the probability of Carvana Co's future price movements. You can analyze the entity against its peers and financial market as a whole to determine factors that move Carvana Co's price. Additionally, you may evaluate how the addition of Carvana Co to your portfolios can decrease your overall portfolio volatility.
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Is Carvana Co's industry expected to grow? Or is there an opportunity to expand the business' product line in the future? Factors like these will boost the valuation of Carvana Co. If investors know Carvana will grow in the future, the company's valuation will be higher. The financial industry is built on trying to define current growth potential and future valuation accurately. All the valuation information about Carvana Co listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
The market value of Carvana Co Cl is measured differently than its book value, which is the value of Carvana that is recorded on the company's balance sheet. Investors also form their own opinion of Carvana Co's value that differs from its market value or its book value, called intrinsic value, which is Carvana Co's true underlying value. Investors use various methods to calculate intrinsic value and buy a stock when its market value falls below its intrinsic value. Because Carvana Co's market value can be influenced by many factors that don't directly affect Carvana Co's underlying business (such as a pandemic or basic market pessimism), market value can vary widely from intrinsic value.
Please note, there is a significant difference between Carvana Co's value and its price as these two are different measures arrived at by different means. Investors typically determine Carvana Co value by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Carvana Co's price is the amount at which it trades on the open market and represents the number that a seller and buyer find agreeable to each party.