Correlation Between Asbury Automotive and Siriuspoint

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

Diversification Opportunities for Asbury Automotive and Siriuspoint

0.78

Correlation Coefficient

Asbury Automotive  Siriuspoint

Poor diversification

The 3 months correlation between Asbury and Siriuspoint is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Asbury Automotive Group and Siriuspoint in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siriuspoint 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 Siriuspoint. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siriuspoint has no effect on the direction of Asbury Automotive i.e., Asbury Automotive and Siriuspoint go up and down completely randomly.

Pair Corralation between Asbury Automotive and Siriuspoint

Considering the 90-day investment horizon Asbury Automotive Group is expected to under-perform the Siriuspoint. In addition to that, Asbury Automotive is 1.0 times more volatile than Siriuspoint. It trades about -0.04 of its total potential returns per unit of risk. Siriuspoint is currently generating about 0.05 per unit of volatility. If you would invest  1,495  in Siriuspoint on September 19, 2024 and sell it today you would earn a total of  19.00  from holding Siriuspoint or generate 1.27% return on investment over 90 days.

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

Asbury Automotive Group  vs.  Siriuspoint

Asbury Automotive

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Asbury Automotive Group are ranked lower than 7 (%) 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 January 2025.

Siriuspoint

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Siriuspoint are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Siriuspoint may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Asbury Automotive and Siriuspoint

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

The idea behind Asbury Automotive Group and Siriuspoint 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.