Correlation Between Asbury Automotive and Birks
Can any of the company-specific risk be diversified away by investing in both Asbury Automotive and Birks 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 Birks 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 Birks Group, you can compare the effects of market volatilities on Asbury Automotive and Birks 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 Birks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asbury Automotive and Birks.
Diversification Opportunities for Asbury Automotive and Birks
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Asbury and Birks is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Asbury Automotive Group and Birks Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Birks Group 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 Birks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Birks Group has no effect on the direction of Asbury Automotive i.e., Asbury Automotive and Birks go up and down completely randomly.
Pair Corralation between Asbury Automotive and Birks
Considering the 90-day investment horizon Asbury Automotive Group is expected to generate 0.63 times more return on investment than Birks. However, Asbury Automotive Group is 1.6 times less risky than Birks. It trades about 0.03 of its potential returns per unit of risk. Birks Group is currently generating about -0.04 per unit of risk. If you would invest 21,987 in Asbury Automotive Group on September 12, 2024 and sell it today you would earn a total of 3,687 from holding Asbury Automotive Group or generate 16.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Asbury Automotive Group vs. Birks Group
Performance |
| Timeline |
| Asbury Automotive |
| Birks Group |
Asbury Automotive and Birks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asbury Automotive and Birks
The main advantage of trading using opposite Asbury Automotive and Birks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asbury Automotive position performs unexpectedly, Birks 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 Birks will offset losses from the drop in Birks' long position.| Asbury Automotive vs. Sonic Automotive | Asbury Automotive vs. Lithia Motors | Asbury Automotive vs. AutoNation | Asbury Automotive vs. Penske Automotive Group |
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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