Correlation Between High Yield and CarMax
Can any of the company-specific risk be diversified away by investing in both High Yield 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 High Yield and CarMax into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between High Yield Municipal Fund and CarMax Inc, you can compare the effects of market volatilities on High Yield 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 High Yield with a short position of CarMax. Check out your portfolio center. Please also check ongoing floating volatility patterns of High Yield and CarMax.
Diversification Opportunities for High Yield and CarMax
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between High and CarMax is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding High Yield Municipal Fund and CarMax Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CarMax Inc and High Yield 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 High Yield Municipal Fund 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 High Yield i.e., High Yield and CarMax go up and down completely randomly.
Pair Corralation between High Yield and CarMax
Assuming the 90 days horizon High Yield Municipal Fund is expected to generate 0.09 times more return on investment than CarMax. However, High Yield Municipal Fund is 10.84 times less risky than CarMax. It trades about -0.03 of its potential returns per unit of risk. CarMax Inc is currently generating about -0.06 per unit of risk. If you would invest 845.00 in High Yield Municipal Fund on June 5, 2025 and sell it today you would lose (3.00) from holding High Yield Municipal Fund or give up 0.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
High Yield Municipal Fund vs. CarMax Inc
Performance |
| Timeline |
| High Yield Municipal |
| CarMax Inc |
High Yield and CarMax Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with High Yield and CarMax
The main advantage of trading using opposite High Yield and CarMax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if High Yield 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.| High Yield vs. High Yield Fund Investor | High Yield vs. Intermediate Term Tax Free Bond | High Yield vs. California High Yield Municipal | High Yield vs. T Rowe Price |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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