Correlation Between SunCar Technology and Carvana

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

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

Diversification Opportunities for SunCar Technology and Carvana

-0.41

Correlation Coefficient

SunCar Technology  Carvana

Very good diversification

The 3 months correlation between SunCar and Carvana is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding SunCar Technology Group and Carvana Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carvana and SunCar Technology 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 SunCar Technology Group 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 SunCar Technology i.e., SunCar Technology and Carvana go up and down completely randomly.

Pair Corralation between SunCar Technology and Carvana

Considering the 90-day investment horizon SunCar Technology Group is expected to generate 1.1 times more return on investment than Carvana. However, SunCar Technology is 1.1 times more volatile than Carvana Co. It trades about 0.07 of its potential returns per unit of risk. Carvana Co is currently generating about -0.02 per unit of risk. If you would invest  730.00  in SunCar Technology Group on January 30, 2024 and sell it today you would earn a total of  33.00  from holding SunCar Technology Group or generate 4.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

SunCar Technology Group  vs.  Carvana Co

SunCar Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SunCar Technology Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, SunCar Technology is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Carvana

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Carvana Co are ranked lower than 15 (%) 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 SunCar Technology and Carvana

The main advantage of trading using opposite SunCar Technology and Carvana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SunCar Technology 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 SunCar Technology Group 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.

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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.