Correlation Between Asbury Automotive and Nextnav Acquisition

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

Diversification Opportunities for Asbury Automotive and Nextnav Acquisition

-0.28

Correlation Coefficient

Asbury Automotive  Nextnav Acquisition

Very good diversification

The 3 months correlation between Asbury and Nextnav is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Asbury Automotive Group and Nextnav Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextnav Acquisition Corp 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 Nextnav Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextnav Acquisition Corp has no effect on the direction of Asbury Automotive i.e., Asbury Automotive and Nextnav Acquisition go up and down completely randomly.

Pair Corralation between Asbury Automotive and Nextnav Acquisition

Considering the 90-day investment horizon Asbury Automotive Group is expected to generate 0.49 times more return on investment than Nextnav Acquisition. However, Asbury Automotive Group is 2.03 times less risky than Nextnav Acquisition. It trades about -0.04 of its potential returns per unit of risk. Nextnav Acquisition Corp is currently generating about -0.05 per unit of risk. If you would invest  24,453  in Asbury Automotive Group on December 27, 2024 and sell it today you would lose (1,839) from holding Asbury Automotive Group or give up 7.52% of portfolio value over 90 days.

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

Asbury Automotive Group  vs.  Nextnav Acquisition Corp

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.

Nextnav Acquisition Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nextnav Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Asbury Automotive and Nextnav Acquisition

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

The idea behind Asbury Automotive Group and Nextnav Acquisition Corp 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.

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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.