Correlation Between PlayAGS and AutoNation

Can any of the company-specific risk be diversified away by investing in both PlayAGS and AutoNation 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 PlayAGS and AutoNation into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PlayAGS and AutoNation, you can compare the effects of market volatilities on PlayAGS and AutoNation 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 PlayAGS with a short position of AutoNation. Check out your portfolio center. Please also check ongoing floating volatility patterns of PlayAGS and AutoNation.

Diversification Opportunities for PlayAGS and AutoNation

0.31

Correlation Coefficient

PlayAGS  AutoNation

Weak diversification

The 3 months correlation between PlayAGS and AutoNation is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding PlayAGS and AutoNation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AutoNation and PlayAGS 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 PlayAGS are associated (or correlated) with AutoNation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AutoNation has no effect on the direction of PlayAGS i.e., PlayAGS and AutoNation go up and down completely randomly.

Pair Corralation between PlayAGS and AutoNation

Considering the 90-day investment horizon PlayAGS is expected to generate 0.16 times more return on investment than AutoNation. However, PlayAGS is 6.06 times less risky than AutoNation. It trades about 0.27 of its potential returns per unit of risk. AutoNation is currently generating about -0.04 per unit of risk. If you would invest  1,150  in PlayAGS on December 29, 2024 and sell it today you would earn a total of  62.00  from holding PlayAGS or generate 5.39% return on investment over 90 days.

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

PlayAGS  vs.  AutoNation

PlayAGS

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in PlayAGS are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, PlayAGS is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

AutoNation

Risk-Adjusted Performance

Very Weak

Over the last 90 days AutoNation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, AutoNation is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with PlayAGS and AutoNation

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

The idea behind PlayAGS and AutoNation 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.