Correlation Between Asbury Automotive and Rogers

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

Diversification Opportunities for Asbury Automotive and Rogers

0.55

Correlation Coefficient

Asbury Automotive  Rogers

Very weak diversification

The 3 months correlation between Asbury and Rogers is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Asbury Automotive Group and Rogers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rogers 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 Rogers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rogers has no effect on the direction of Asbury Automotive i.e., Asbury Automotive and Rogers go up and down completely randomly.

Pair Corralation between Asbury Automotive and Rogers

Considering the 90-day investment horizon Asbury Automotive Group is expected to generate 0.92 times more return on investment than Rogers. However, Asbury Automotive Group is 1.08 times less risky than Rogers. It trades about 0.13 of its potential returns per unit of risk. Rogers is currently generating about -0.03 per unit of risk. If you would invest  22,558  in Asbury Automotive Group on October 26, 2024 and sell it today you would earn a total of  3,426  from holding Asbury Automotive Group or generate 15.19% return on investment over 90 days.

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

Asbury Automotive Group  vs.  Rogers

Asbury Automotive

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Asbury Automotive Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent fundamental drivers, Asbury Automotive reported solid returns over the last few months and may actually be approaching a breakup point.

Rogers

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rogers has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Rogers is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Asbury Automotive and Rogers

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

The idea behind Asbury Automotive Group and Rogers 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.