Correlation Between Asbury Automotive and AALLN

Can any of the company-specific risk be diversified away by investing in both Asbury Automotive and AALLN 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 AALLN 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 AALLN 225 17 MAR 28, you can compare the effects of market volatilities on Asbury Automotive and AALLN 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 AALLN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asbury Automotive and AALLN.

Diversification Opportunities for Asbury Automotive and AALLN

0.22

Correlation Coefficient

Asbury Automotive  AALLN

Modest diversification

The 3 months correlation between Asbury and AALLN is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Asbury Automotive Group and AALLN 225 17 MAR 28 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AALLN 225 17 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 AALLN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AALLN 225 17 has no effect on the direction of Asbury Automotive i.e., Asbury Automotive and AALLN go up and down completely randomly.

Pair Corralation between Asbury Automotive and AALLN

Considering the 90-day investment horizon Asbury Automotive Group is expected to under-perform the AALLN. But the stock apears to be less risky and, when comparing its historical volatility, Asbury Automotive Group is 1.3 times less risky than AALLN. The stock trades about -0.03 of its potential returns per unit of risk. The AALLN 225 17 MAR 28 is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  9,140  in AALLN 225 17 MAR 28 on December 28, 2024 and sell it today you would earn a total of  173.00  from holding AALLN 225 17 MAR 28 or generate 1.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	23.33%
Values	Daily Returns

Asbury Automotive Group  vs.  AALLN 225 17 MAR 28

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.

AALLN 225 17

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AALLN 225 17 MAR 28 are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, AALLN may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Asbury Automotive and AALLN

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

The idea behind Asbury Automotive Group and AALLN 225 17 MAR 28 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.