Correlation Between Hudson Pacific and Asbury Automotive

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

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

Diversification Opportunities for Hudson Pacific and Asbury Automotive

-0.72

Correlation Coefficient

Hudson Pacific  Asbury Automotive

Pay attention - limited upside

The 3 months correlation between Hudson and Asbury is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Hudson Pacific Properties and Asbury Automotive Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asbury Automotive and Hudson Pacific 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 Hudson Pacific Properties 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 Hudson Pacific i.e., Hudson Pacific and Asbury Automotive go up and down completely randomly.

Pair Corralation between Hudson Pacific and Asbury Automotive

Considering the 90-day investment horizon Hudson Pacific Properties is expected to under-perform the Asbury Automotive. In addition to that, Hudson Pacific is 1.89 times more volatile than Asbury Automotive Group. It trades about -0.16 of its total potential returns per unit of risk. Asbury Automotive Group is currently generating about 0.15 per unit of volatility. If you would invest  21,293  in Asbury Automotive Group on September 12, 2024 and sell it today you would earn a total of  4,270  from holding Asbury Automotive Group or generate 20.05% return on investment over 90 days.

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

Hudson Pacific Properties  vs.  Asbury Automotive Group

Hudson Pacific Properties

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hudson Pacific Properties has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Asbury Automotive

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Asbury Automotive Group are ranked lower than 11 (%) 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.

Pair Trading with Hudson Pacific and Asbury Automotive

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

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 Global Correlations module to find global opportunities by holding instruments from different markets.