Correlation Between Asbury Automotive and Air Transport
Can any of the company-specific risk be diversified away by investing in both Asbury Automotive and Air Transport 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 Air Transport 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 Air Transport Services, you can compare the effects of market volatilities on Asbury Automotive and Air Transport 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 Air Transport. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asbury Automotive and Air Transport.
Diversification Opportunities for Asbury Automotive and Air Transport
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Asbury and Air is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Asbury Automotive Group and Air Transport Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Transport Services 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 Air Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Transport Services has no effect on the direction of Asbury Automotive i.e., Asbury Automotive and Air Transport go up and down completely randomly.
Pair Corralation between Asbury Automotive and Air Transport
Considering the 90-day investment horizon Asbury Automotive is expected to generate 1.72 times less return on investment than Air Transport. In addition to that, Asbury Automotive is 13.32 times more volatile than Air Transport Services. It trades about 0.02 of its total potential returns per unit of risk. Air Transport Services is currently generating about 0.46 per unit of volatility. If you would invest 2,190 in Air Transport Services on October 20, 2024 and sell it today you would earn a total of 21.00 from holding Air Transport Services or generate 0.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Asbury Automotive Group vs. Air Transport Services
Performance |
| Timeline |
| Asbury Automotive |
| Air Transport Services |
Asbury Automotive and Air Transport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asbury Automotive and Air Transport
The main advantage of trading using opposite Asbury Automotive and Air Transport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asbury Automotive position performs unexpectedly, Air Transport 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 Air Transport will offset losses from the drop in Air Transport's long position.| Asbury Automotive vs. Sonic Automotive | Asbury Automotive vs. Lithia Motors | Asbury Automotive vs. AutoNation | Asbury Automotive vs. Penske Automotive Group |
| Air Transport vs. Copa Holdings SA | Air Transport vs. SkyWest | Air Transport vs. Sun Country Airlines | Air Transport vs. Frontier Group Holdings |
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 CEOs Directory module to screen CEOs from public companies around the world.
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