Correlation Between Asbury Automotive and Fly Leasing

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

Diversification Opportunities for Asbury Automotive and Fly Leasing

0.0

Correlation Coefficient

Asbury Automotive  Fly Leasing

Pay attention - limited upside

The 3 months correlation between Asbury and Fly is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Asbury Automotive Group and Fly Leasing Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fly Leasing Limited 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 Fly Leasing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fly Leasing Limited has no effect on the direction of Asbury Automotive i.e., Asbury Automotive and Fly Leasing go up and down completely randomly.

Pair Corralation between Asbury Automotive and Fly Leasing

If you would invest (100.00) in Fly Leasing Limited on December 19, 2024 and sell it today you would earn a total of  100.00  from holding Fly Leasing Limited or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Asbury Automotive Group  vs.  Fly Leasing 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.

Fly Leasing Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fly Leasing Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong essential indicators, Fly Leasing is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Asbury Automotive and Fly Leasing

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

The idea behind Asbury Automotive Group and Fly Leasing 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.