Correlation Between KAR Auction and ASGN

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

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

Diversification Opportunities for KAR Auction and ASGN

-0.6

Correlation Coefficient

KAR Auction  ASGN

Excellent diversification

The 3 months correlation between KAR and ASGN is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding KAR Auction Services and ASGN Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASGN Inc and KAR Auction 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 KAR Auction Services are associated (or correlated) with ASGN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASGN Inc has no effect on the direction of KAR Auction i.e., KAR Auction and ASGN go up and down completely randomly.

Pair Corralation between KAR Auction and ASGN

Considering the 90-day investment horizon KAR Auction Services is expected to generate 1.0 times more return on investment than ASGN. However, KAR Auction Services is 1.0 times less risky than ASGN. It trades about 0.21 of its potential returns per unit of risk. ASGN Inc is currently generating about -0.07 per unit of risk. If you would invest  1,581  in KAR Auction Services on October 9, 2024 and sell it today you would earn a total of  455.00  from holding KAR Auction Services or generate 28.78% return on investment over 90 days.

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

KAR Auction Services  vs.  ASGN Inc

KAR Auction Services

Risk-Adjusted Performance

16 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in KAR Auction Services are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, KAR Auction reported solid returns over the last few months and may actually be approaching a breakup point.

ASGN Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ASGN Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with KAR Auction and ASGN

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

The idea behind KAR Auction Services and ASGN Inc 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.