Correlation Between Asbury Automotive and Cooper Stnd

Can any of the company-specific risk be diversified away by investing in both Asbury Automotive and Cooper Stnd 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 Cooper Stnd 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 Cooper Stnd, you can compare the effects of market volatilities on Asbury Automotive and Cooper Stnd 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 Cooper Stnd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asbury Automotive and Cooper Stnd.

Diversification Opportunities for Asbury Automotive and Cooper Stnd

0.68

Correlation Coefficient

Asbury Automotive  Cooper Stnd

Poor diversification

The 3 months correlation between Asbury and Cooper is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Asbury Automotive Group and Cooper Stnd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cooper Stnd 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 Cooper Stnd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cooper Stnd has no effect on the direction of Asbury Automotive i.e., Asbury Automotive and Cooper Stnd go up and down completely randomly.

Pair Corralation between Asbury Automotive and Cooper Stnd

Considering the 90-day investment horizon Asbury Automotive is expected to generate 1.67 times less return on investment than Cooper Stnd. But when comparing it to its historical volatility, Asbury Automotive Group is 2.06 times less risky than Cooper Stnd. It trades about 0.03 of its potential returns per unit of risk. Cooper Stnd is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,230  in Cooper Stnd on October 4, 2024 and sell it today you would earn a total of  126.00  from holding Cooper Stnd or generate 10.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Asbury Automotive Group  vs.  Cooper Stnd

Asbury Automotive

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Asbury Automotive Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental drivers, Asbury Automotive is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Cooper Stnd

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cooper Stnd are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Cooper Stnd is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Asbury Automotive and Cooper Stnd

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

The idea behind Asbury Automotive Group and Cooper Stnd 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.