Correlation Between Asbury Automotive and Arrow Electronics
Can any of the company-specific risk be diversified away by investing in both Asbury Automotive and Arrow Electronics 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 Arrow Electronics 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 Arrow Electronics, you can compare the effects of market volatilities on Asbury Automotive and Arrow Electronics 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 Arrow Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asbury Automotive and Arrow Electronics.
Diversification Opportunities for Asbury Automotive and Arrow Electronics
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Asbury and Arrow is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Asbury Automotive Group and Arrow Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow Electronics 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 Arrow Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arrow Electronics has no effect on the direction of Asbury Automotive i.e., Asbury Automotive and Arrow Electronics go up and down completely randomly.
Pair Corralation between Asbury Automotive and Arrow Electronics
Considering the 90-day investment horizon Asbury Automotive Group is expected to generate 1.42 times more return on investment than Arrow Electronics. However, Asbury Automotive is 1.42 times more volatile than Arrow Electronics. It trades about 0.05 of its potential returns per unit of risk. Arrow Electronics is currently generating about 0.01 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. Arrow Electronics
Performance |
| Timeline |
| Asbury Automotive |
| Arrow Electronics |
Asbury Automotive and Arrow Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asbury Automotive and Arrow Electronics
The main advantage of trading using opposite Asbury Automotive and Arrow Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asbury Automotive position performs unexpectedly, Arrow Electronics 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 Arrow Electronics will offset losses from the drop in Arrow Electronics' long position.| Asbury Automotive vs. Kingsway Financial Services | Asbury Automotive vs. KAR Auction Services | Asbury Automotive vs. Cango Inc | Asbury Automotive vs. Vroom Inc |
| Arrow Electronics vs. Insight Enterprises | Arrow Electronics vs. Synnex | Arrow Electronics vs. Climb Global Solutions | Arrow Electronics vs. ScanSource |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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