Correlation Between Asbury Automotive and World Houseware

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

Diversification Opportunities for Asbury Automotive and World Houseware

0.0

Correlation Coefficient

Asbury Automotive  World Houseware

Pay attention - limited upside

The 3 months correlation between Asbury and World is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Asbury Automotive Group and World Houseware Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on World Houseware 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 World Houseware. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of World Houseware has no effect on the direction of Asbury Automotive i.e., Asbury Automotive and World Houseware go up and down completely randomly.

Pair Corralation between Asbury Automotive and World Houseware

If you would invest  24,378  in Asbury Automotive Group on October 24, 2024 and sell it today you would earn a total of  1,314  from holding Asbury Automotive Group or generate 5.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	85.71%
Values	Daily Returns

Asbury Automotive Group  vs.  World Houseware Limited

Asbury Automotive

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Asbury Automotive Group are ranked lower than 9 (%) 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.

World Houseware

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Asbury Automotive and World Houseware

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

The idea behind Asbury Automotive Group and World Houseware Limited 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.