Correlation Between AutoNation and LandBridge Company

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

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

Diversification Opportunities for AutoNation and LandBridge Company

0.09

Correlation Coefficient

AutoNation  LandBridge Company

Significant diversification

The 3 months correlation between AutoNation and LandBridge is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding AutoNation and LandBridge Company LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LandBridge Company and AutoNation 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 AutoNation are associated (or correlated) with LandBridge Company. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LandBridge Company has no effect on the direction of AutoNation i.e., AutoNation and LandBridge Company go up and down completely randomly.

Pair Corralation between AutoNation and LandBridge Company

Allowing for the 90-day total investment horizon AutoNation is expected to generate 0.26 times more return on investment than LandBridge Company. However, AutoNation is 3.8 times less risky than LandBridge Company. It trades about -0.16 of its potential returns per unit of risk. LandBridge Company LLC is currently generating about -0.21 per unit of risk. If you would invest  17,958  in AutoNation on September 25, 2024 and sell it today you would lose (628.00) from holding AutoNation or give up 3.5% of portfolio value over 90 days.

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

AutoNation  vs.  LandBridge Company LLC

AutoNation

Risk-Adjusted Performance

0 of 100

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.

LandBridge Company

Risk-Adjusted Performance

12 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in LandBridge Company LLC are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating fundamental drivers, LandBridge Company sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AutoNation and LandBridge Company

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

The idea behind AutoNation and LandBridge Company LLC 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.