Correlation Between Gravitas Education and Asbury Automotive

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

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

Diversification Opportunities for Gravitas Education and Asbury Automotive

0.0

Correlation Coefficient

Gravitas Education  Asbury Automotive

Pay attention - limited upside

The 3 months correlation between Gravitas and Asbury is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Gravitas Education Holdings and Asbury Automotive Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asbury Automotive and Gravitas Education 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 Gravitas Education Holdings 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 Gravitas Education i.e., Gravitas Education and Asbury Automotive go up and down completely randomly.

Pair Corralation between Gravitas Education and Asbury Automotive

If you would invest (100.00) in Gravitas Education Holdings on December 26, 2024 and sell it today you would earn a total of  100.00  from holding Gravitas Education Holdings or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Gravitas Education Holdings  vs.  Asbury Automotive Group

Gravitas Education

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gravitas Education Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, Gravitas Education is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

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.

Pair Trading with Gravitas Education and Asbury Automotive

The main advantage of trading using opposite Gravitas Education and Asbury Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gravitas Education 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.

The idea behind Gravitas Education Holdings and Asbury Automotive Group 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.