Correlation Between CDW Corp and Asbury Automotive
Can any of the company-specific risk be diversified away by investing in both CDW Corp and Asbury Automotive 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 CDW Corp and Asbury Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CDW Corp and Asbury Automotive Group, you can compare the effects of market volatilities on CDW Corp and Asbury Automotive 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 CDW Corp with a short position of Asbury Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of CDW Corp and Asbury Automotive.
Diversification Opportunities for CDW Corp and Asbury Automotive
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between CDW and Asbury is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding CDW Corp and Asbury Automotive Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asbury Automotive and CDW Corp 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 CDW Corp are associated (or correlated) with Asbury Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asbury Automotive has no effect on the direction of CDW Corp i.e., CDW Corp and Asbury Automotive go up and down completely randomly.
Pair Corralation between CDW Corp and Asbury Automotive
Considering the 90-day investment horizon CDW Corp is expected to generate 1.07 times more return on investment than Asbury Automotive. However, CDW Corp is 1.07 times more volatile than Asbury Automotive Group. It trades about -0.12 of its potential returns per unit of risk. Asbury Automotive Group is currently generating about -0.36 per unit of risk. If you would invest 18,134 in CDW Corp on September 24, 2024 and sell it today you would lose (578.00) from holding CDW Corp or give up 3.19% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
CDW Corp vs. Asbury Automotive Group
Performance |
Timeline |
CDW Corp |
Asbury Automotive |
CDW Corp and Asbury Automotive Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CDW Corp and Asbury Automotive
The main advantage of trading using opposite CDW Corp and Asbury Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CDW Corp position performs unexpectedly, Asbury Automotive 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 Asbury Automotive will offset losses from the drop in Asbury Automotive's long position.CDW Corp vs. Rigetti Computing | CDW Corp vs. Quantum Computing | CDW Corp vs. IONQ Inc | CDW Corp vs. Quantum |
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Check out your portfolio center.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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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