Correlation Between Asbury Automotive and Eurobank Ergasias

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

Diversification Opportunities for Asbury Automotive and Eurobank Ergasias

-0.64

Correlation Coefficient

Asbury Automotive  Eurobank Ergasias

Excellent diversification

The 3 months correlation between Asbury and Eurobank is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Asbury Automotive Group and Eurobank Ergasias Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eurobank Ergasias 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 Eurobank Ergasias. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eurobank Ergasias has no effect on the direction of Asbury Automotive i.e., Asbury Automotive and Eurobank Ergasias go up and down completely randomly.

Pair Corralation between Asbury Automotive and Eurobank Ergasias

Considering the 90-day investment horizon Asbury Automotive is expected to generate 3.25 times less return on investment than Eurobank Ergasias. But when comparing it to its historical volatility, Asbury Automotive Group is 1.73 times less risky than Eurobank Ergasias. It trades about 0.04 of its potential returns per unit of risk. Eurobank Ergasias Services is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  122.00  in Eurobank Ergasias Services on October 10, 2024 and sell it today you would earn a total of  102.00  from holding Eurobank Ergasias Services or generate 83.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	65.86%
Values	Daily Returns

Asbury Automotive Group  vs.  Eurobank Ergasias Services

Asbury Automotive

Risk-Adjusted Performance

6 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Asbury Automotive Group are ranked lower than 6 (%) 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 February 2025.

Eurobank Ergasias

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Eurobank Ergasias Services are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Eurobank Ergasias is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Asbury Automotive and Eurobank Ergasias

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

The idea behind Asbury Automotive Group and Eurobank Ergasias Services 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 Stocks Directory module to find actively traded stocks across global markets.