Correlation Between Asbury Automotive and Analog Devices
Can any of the company-specific risk be diversified away by investing in both Asbury Automotive and Analog Devices 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 Asbury Automotive and Analog Devices into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Asbury Automotive Group and Analog Devices, you can compare the effects of market volatilities on Asbury Automotive and Analog Devices 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 Asbury Automotive with a short position of Analog Devices. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asbury Automotive and Analog Devices.
Diversification Opportunities for Asbury Automotive and Analog Devices
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Asbury and Analog is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Asbury Automotive Group and Analog Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Analog Devices and Asbury Automotive 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 Asbury Automotive Group are associated (or correlated) with Analog Devices. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Analog Devices has no effect on the direction of Asbury Automotive i.e., Asbury Automotive and Analog Devices go up and down completely randomly.
Pair Corralation between Asbury Automotive and Analog Devices
Considering the 90-day investment horizon Asbury Automotive Group is expected to generate 1.22 times more return on investment than Analog Devices. However, Asbury Automotive is 1.22 times more volatile than Analog Devices. It trades about 0.05 of its potential returns per unit of risk. Analog Devices is currently generating about 0.04 per unit of risk. If you would invest 18,941 in Asbury Automotive Group on August 26, 2024 and sell it today you would earn a total of 7,189 from holding Asbury Automotive Group or generate 37.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Asbury Automotive Group vs. Analog Devices
Performance |
| Timeline |
| Asbury Automotive |
| Analog Devices |
Asbury Automotive and Analog Devices Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asbury Automotive and Analog Devices
The main advantage of trading using opposite Asbury Automotive and Analog Devices positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asbury Automotive position performs unexpectedly, Analog Devices 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 Analog Devices will offset losses from the drop in Analog Devices' long position.| Asbury Automotive vs. Kingsway Financial Services | Asbury Automotive vs. KAR Auction Services | Asbury Automotive vs. Cango Inc | Asbury Automotive vs. Vroom Inc |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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