Correlation Between Asbury Automotive and 694308KC0

Can any of the company-specific risk be diversified away by investing in both Asbury Automotive and 694308KC0 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 694308KC0 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 PCG 44 01 MAR 32, you can compare the effects of market volatilities on Asbury Automotive and 694308KC0 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 694308KC0. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asbury Automotive and 694308KC0.

Diversification Opportunities for Asbury Automotive and 694308KC0

-0.34

Correlation Coefficient

Asbury Automotive  694308KC0

Very good diversification

The 3 months correlation between Asbury and 694308KC0 is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Asbury Automotive Group and PCG 44 01 MAR 32 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PCG 44 01 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 694308KC0. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PCG 44 01 has no effect on the direction of Asbury Automotive i.e., Asbury Automotive and 694308KC0 go up and down completely randomly.

Pair Corralation between Asbury Automotive and 694308KC0

Considering the 90-day investment horizon Asbury Automotive Group is expected to under-perform the 694308KC0. In addition to that, Asbury Automotive is 2.63 times more volatile than PCG 44 01 MAR 32. It trades about -0.01 of its total potential returns per unit of risk. PCG 44 01 MAR 32 is currently generating about 0.05 per unit of volatility. If you would invest  9,407  in PCG 44 01 MAR 32 on December 25, 2024 and sell it today you would earn a total of  145.00  from holding PCG 44 01 MAR 32 or generate 1.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	64.41%
Values	Daily Returns

Asbury Automotive Group  vs.  PCG 44 01 MAR 32

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.

PCG 44 01

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PCG 44 01 MAR 32 are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, 694308KC0 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Asbury Automotive and 694308KC0

The main advantage of trading using opposite Asbury Automotive and 694308KC0 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asbury Automotive position performs unexpectedly, 694308KC0 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 694308KC0 will offset losses from the drop in 694308KC0's long position.

The idea behind Asbury Automotive Group and PCG 44 01 MAR 32 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.