Correlation Between Orea Mining and CarMax

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

By analyzing existing cross correlation between Orea Mining Corp and CarMax Inc, you can compare the effects of market volatilities on Orea Mining and CarMax 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 Orea Mining with a short position of CarMax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orea Mining and CarMax.

Diversification Opportunities for Orea Mining and CarMax

0.92

Correlation Coefficient

Orea Mining  CarMax

Almost no diversification

The 3 months correlation between Orea and CarMax is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Orea Mining Corp and CarMax Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CarMax Inc and Orea Mining 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 Orea Mining Corp are associated (or correlated) with CarMax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CarMax Inc has no effect on the direction of Orea Mining i.e., Orea Mining and CarMax go up and down completely randomly.

Pair Corralation between Orea Mining and CarMax

Assuming the 90 days horizon Orea Mining Corp is expected to generate 62.06 times more return on investment than CarMax. However, Orea Mining is 62.06 times more volatile than CarMax Inc. It trades about 0.11 of its potential returns per unit of risk. CarMax Inc is currently generating about -0.13 per unit of risk. If you would invest  1.00  in Orea Mining Corp on March 28, 2024 and sell it today you would lose (1.00) from holding Orea Mining Corp or give up 99.9% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.39%
Values	Daily Returns

Orea Mining Corp  vs.  CarMax Inc

Orea Mining Corp

Risk-Adjusted Performance

8 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Orea Mining Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Orea Mining reported solid returns over the last few months and may actually be approaching a breakup point.

CarMax Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CarMax Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's primary indicators remain fairly strong which may send shares a bit higher in July 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Orea Mining and CarMax

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

The idea behind Orea Mining Corp and CarMax Inc 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.