Correlation Between Asbury Automotive and Barings BDC

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Can any of the company-specific risk be diversified away by investing in both Asbury Automotive and Barings BDC 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 Asbury Automotive and Barings BDC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Asbury Automotive Group and Barings BDC, you can compare the effects of market volatilities on Asbury Automotive and Barings BDC 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 Asbury Automotive with a short position of Barings BDC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asbury Automotive and Barings BDC.

Diversification Opportunities for Asbury Automotive and Barings BDC

0.53
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Asbury and Barings is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Asbury Automotive Group and Barings BDC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barings BDC and Asbury Automotive 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 Asbury Automotive Group are associated (or correlated) with Barings BDC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barings BDC has no effect on the direction of Asbury Automotive i.e., Asbury Automotive and Barings BDC go up and down completely randomly.

Pair Corralation between Asbury Automotive and Barings BDC

Considering the 90-day investment horizon Asbury Automotive Group is expected to generate 2.0 times more return on investment than Barings BDC. However, Asbury Automotive is 2.0 times more volatile than Barings BDC. It trades about 0.04 of its potential returns per unit of risk. Barings BDC is currently generating about 0.07 per unit of risk. If you would invest  17,500  in Asbury Automotive Group on September 19, 2024 and sell it today you would earn a total of  6,851  from holding Asbury Automotive Group or generate 39.15% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Asbury Automotive Group  vs.  Barings BDC

 Performance 
       Timeline  
Asbury Automotive 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Asbury Automotive Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent fundamental drivers, Asbury Automotive may actually be approaching a critical reversion point that can send shares even higher in January 2025.
Barings BDC 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Barings BDC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Barings BDC is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Asbury Automotive and Barings BDC Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Asbury Automotive and Barings BDC

The main advantage of trading using opposite Asbury Automotive and Barings BDC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asbury Automotive position performs unexpectedly, Barings BDC 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 Barings BDC will offset losses from the drop in Barings BDC's long position.
The idea behind Asbury Automotive Group and Barings BDC 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..

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