Correlation Between Asbury Automotive and Encore Capital
Can any of the company-specific risk be diversified away by investing in both Asbury Automotive and Encore Capital 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 Encore Capital 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 Encore Capital Group, you can compare the effects of market volatilities on Asbury Automotive and Encore Capital 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 Encore Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asbury Automotive and Encore Capital.
Diversification Opportunities for Asbury Automotive and Encore Capital
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Asbury and Encore is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Asbury Automotive Group and Encore Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Encore Capital Group 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 Encore Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Encore Capital Group has no effect on the direction of Asbury Automotive i.e., Asbury Automotive and Encore Capital go up and down completely randomly.
Pair Corralation between Asbury Automotive and Encore Capital
Considering the 90-day investment horizon Asbury Automotive Group is expected to under-perform the Encore Capital. In addition to that, Asbury Automotive is 1.12 times more volatile than Encore Capital Group. It trades about -0.14 of its total potential returns per unit of risk. Encore Capital Group is currently generating about -0.08 per unit of volatility. If you would invest 4,977 in Encore Capital Group on October 7, 2024 and sell it today you would lose (223.00) from holding Encore Capital Group or give up 4.48% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Asbury Automotive Group vs. Encore Capital Group
Performance |
Timeline |
Asbury Automotive |
Encore Capital Group |
Asbury Automotive and Encore Capital Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Asbury Automotive and Encore Capital
The main advantage of trading using opposite Asbury Automotive and Encore Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asbury Automotive position performs unexpectedly, Encore Capital 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 Encore Capital will offset losses from the drop in Encore Capital's long position.Asbury Automotive vs. Sonic Automotive | Asbury Automotive vs. Lithia Motors | Asbury Automotive vs. AutoNation | Asbury Automotive vs. Penske Automotive Group |
Encore Capital vs. Guild Holdings Co | Encore Capital vs. Mr Cooper Group | Encore Capital vs. CNFinance Holdings | Encore Capital vs. Security National Financial |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
Other Complementary Tools
Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes |