Correlation Between Primavera Capital and Asbury Automotive

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

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

Diversification Opportunities for Primavera Capital and Asbury Automotive

-0.01

Correlation Coefficient

Primavera Capital  Asbury Automotive

Good diversification

The 3 months correlation between Primavera and Asbury is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Primavera Capital Acquisition and Asbury Automotive Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asbury Automotive and Primavera Capital 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 Primavera Capital Acquisition 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 Primavera Capital i.e., Primavera Capital and Asbury Automotive go up and down completely randomly.

Pair Corralation between Primavera Capital and Asbury Automotive

If you would invest  23,024  in Asbury Automotive Group on September 24, 2024 and sell it today you would earn a total of  1,354  from holding Asbury Automotive Group or generate 5.88% return on investment over 90 days.

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

Primavera Capital Acquisition  vs.  Asbury Automotive Group

Primavera Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Primavera Capital Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Primavera Capital is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Asbury Automotive

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Asbury Automotive Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating fundamental drivers, Asbury Automotive may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Primavera Capital and Asbury Automotive

The main advantage of trading using opposite Primavera Capital and Asbury Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Primavera Capital 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 Primavera Capital Acquisition 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 Stocks Directory module to find actively traded stocks across global markets.