Correlation Between Asbury Automotive and Evertz Technologies

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

Diversification Opportunities for Asbury Automotive and Evertz Technologies

0.24

Correlation Coefficient

Asbury Automotive  Evertz Technologies

Modest diversification

The 3 months correlation between Asbury and Evertz is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Asbury Automotive Group and Evertz Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evertz Technologies 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 Evertz Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evertz Technologies has no effect on the direction of Asbury Automotive i.e., Asbury Automotive and Evertz Technologies go up and down completely randomly.

Pair Corralation between Asbury Automotive and Evertz Technologies

Considering the 90-day investment horizon Asbury Automotive Group is expected to generate 1.28 times more return on investment than Evertz Technologies. However, Asbury Automotive is 1.28 times more volatile than Evertz Technologies Limited. It trades about -0.03 of its potential returns per unit of risk. Evertz Technologies Limited is currently generating about -0.1 per unit of risk. If you would invest  24,296  in Asbury Automotive Group on December 29, 2024 and sell it today you would lose (1,680) from holding Asbury Automotive Group or give up 6.91% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.31%
Values	Daily Returns

Asbury Automotive Group  vs.  Evertz Technologies Limited

Asbury Automotive

Risk-Adjusted Performance

Very Weak

Over the last 90 days Asbury Automotive Group has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Evertz Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Evertz Technologies Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Asbury Automotive and Evertz Technologies

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

The idea behind Asbury Automotive Group and Evertz Technologies Limited 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.