Correlation Between Asbury Automotive and Teleflex Incorporated
Can any of the company-specific risk be diversified away by investing in both Asbury Automotive and Teleflex Incorporated 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 Teleflex Incorporated 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 Teleflex Incorporated, you can compare the effects of market volatilities on Asbury Automotive and Teleflex Incorporated 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 Teleflex Incorporated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asbury Automotive and Teleflex Incorporated.
Diversification Opportunities for Asbury Automotive and Teleflex Incorporated
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Asbury and Teleflex is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Asbury Automotive Group and Teleflex Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teleflex Incorporated 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 Teleflex Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teleflex Incorporated has no effect on the direction of Asbury Automotive i.e., Asbury Automotive and Teleflex Incorporated go up and down completely randomly.
Pair Corralation between Asbury Automotive and Teleflex Incorporated
Considering the 90-day investment horizon Asbury Automotive is expected to generate 3.13 times less return on investment than Teleflex Incorporated. In addition to that, Asbury Automotive is 1.11 times more volatile than Teleflex Incorporated. It trades about 0.02 of its total potential returns per unit of risk. Teleflex Incorporated is currently generating about 0.08 per unit of volatility. If you would invest 17,825 in Teleflex Incorporated on October 22, 2024 and sell it today you would earn a total of 302.00 from holding Teleflex Incorporated or generate 1.69% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Asbury Automotive Group vs. Teleflex Incorporated
Performance |
Timeline |
Asbury Automotive |
Teleflex Incorporated |
Asbury Automotive and Teleflex Incorporated Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Asbury Automotive and Teleflex Incorporated
The main advantage of trading using opposite Asbury Automotive and Teleflex Incorporated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asbury Automotive position performs unexpectedly, Teleflex Incorporated 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 Teleflex Incorporated will offset losses from the drop in Teleflex Incorporated's long position.Asbury Automotive vs. Sonic Automotive | Asbury Automotive vs. Lithia Motors | Asbury Automotive vs. AutoNation | Asbury Automotive vs. Penske Automotive Group |
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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