Correlation Between Asbury Automotive and Aramark Holdings
Can any of the company-specific risk be diversified away by investing in both Asbury Automotive and Aramark Holdings 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 Aramark Holdings 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 Aramark Holdings, you can compare the effects of market volatilities on Asbury Automotive and Aramark Holdings 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 Aramark Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asbury Automotive and Aramark Holdings.
Diversification Opportunities for Asbury Automotive and Aramark Holdings
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Asbury and Aramark is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Asbury Automotive Group and Aramark Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aramark Holdings 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 Aramark Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aramark Holdings has no effect on the direction of Asbury Automotive i.e., Asbury Automotive and Aramark Holdings go up and down completely randomly.
Pair Corralation between Asbury Automotive and Aramark Holdings
Considering the 90-day investment horizon Asbury Automotive is expected to generate 1.85 times less return on investment than Aramark Holdings. In addition to that, Asbury Automotive is 1.38 times more volatile than Aramark Holdings. It trades about 0.03 of its total potential returns per unit of risk. Aramark Holdings is currently generating about 0.06 per unit of volatility. If you would invest 2,894 in Aramark Holdings on August 31, 2024 and sell it today you would earn a total of 1,175 from holding Aramark Holdings or generate 40.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Asbury Automotive Group vs. Aramark Holdings
Performance |
| Timeline |
| Asbury Automotive |
| Aramark Holdings |
Asbury Automotive and Aramark Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asbury Automotive and Aramark Holdings
The main advantage of trading using opposite Asbury Automotive and Aramark Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asbury Automotive position performs unexpectedly, Aramark Holdings 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 Aramark Holdings will offset losses from the drop in Aramark Holdings' long position.| Asbury Automotive vs. Sonic Automotive | Asbury Automotive vs. Lithia Motors | Asbury Automotive vs. AutoNation | Asbury Automotive vs. Penske Automotive Group |
| Aramark Holdings vs. Civeo Corp | Aramark Holdings vs. ABM Industries Incorporated | Aramark Holdings vs. ADM Endeavors | Aramark Holdings vs. Maximus |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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