Correlation Between Siriuspoint and Asbury Automotive

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

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

Diversification Opportunities for Siriuspoint and Asbury Automotive

0.78

Correlation Coefficient

Siriuspoint  Asbury Automotive

Poor diversification

The 3 months correlation between Siriuspoint and Asbury is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Siriuspoint and Asbury Automotive Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asbury Automotive and Siriuspoint 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 Siriuspoint 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 Siriuspoint i.e., Siriuspoint and Asbury Automotive go up and down completely randomly.

Pair Corralation between Siriuspoint and Asbury Automotive

Given the investment horizon of 90 days Siriuspoint is expected to generate 1.11 times more return on investment than Asbury Automotive. However, Siriuspoint is 1.11 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 0.13 per unit of risk. If you would invest  1,355  in Siriuspoint on September 19, 2024 and sell it today you would earn a total of  145.00  from holding Siriuspoint or generate 10.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	97.62%
Values	Daily Returns

Siriuspoint  vs.  Asbury Automotive Group

Siriuspoint

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Siriuspoint are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Siriuspoint may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Asbury Automotive

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Asbury Automotive Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent fundamental drivers, Asbury Automotive may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Siriuspoint and Asbury Automotive

The main advantage of trading using opposite Siriuspoint and Asbury Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Siriuspoint 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 Siriuspoint 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.