Correlation Between Carvana and Baldwin Insurance

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

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

Diversification Opportunities for Carvana and Baldwin Insurance

-0.08

Correlation Coefficient

Carvana  Baldwin Insurance

Good diversification

The 3 months correlation between Carvana and Baldwin is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Carvana Co and The Baldwin Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baldwin Insurance and Carvana 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 Carvana Co are associated (or correlated) with Baldwin Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baldwin Insurance has no effect on the direction of Carvana i.e., Carvana and Baldwin Insurance go up and down completely randomly.

Pair Corralation between Carvana and Baldwin Insurance

Given the investment horizon of 90 days Carvana Co is expected to generate 1.49 times more return on investment than Baldwin Insurance. However, Carvana is 1.49 times more volatile than The Baldwin Insurance. It trades about 0.16 of its potential returns per unit of risk. The Baldwin Insurance is currently generating about -0.08 per unit of risk. If you would invest  25,881  in Carvana Co on May 6, 2025 and sell it today you would earn a total of  10,185  from holding Carvana Co or generate 39.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Carvana Co  vs.  The Baldwin Insurance

Carvana

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Carvana Co are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Carvana sustained solid returns over the last few months and may actually be approaching a breakup point.

Baldwin Insurance

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Baldwin Insurance has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's forward indicators remain very healthy which may send shares a bit higher in September 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Carvana and Baldwin Insurance

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

The idea behind Carvana Co and The Baldwin Insurance 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 CEOs Directory module to screen CEOs from public companies around the world.