Correlation Between Asbury Automotive and Capital Clean
Can any of the company-specific risk be diversified away by investing in both Asbury Automotive and Capital Clean 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 Capital Clean 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 Capital Clean Energy, you can compare the effects of market volatilities on Asbury Automotive and Capital Clean 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 Capital Clean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asbury Automotive and Capital Clean.
Diversification Opportunities for Asbury Automotive and Capital Clean
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Asbury and Capital is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Asbury Automotive Group and Capital Clean Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Clean Energy 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 Capital Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Clean Energy has no effect on the direction of Asbury Automotive i.e., Asbury Automotive and Capital Clean go up and down completely randomly.
Pair Corralation between Asbury Automotive and Capital Clean
Considering the 90-day investment horizon Asbury Automotive Group is expected to generate 1.26 times more return on investment than Capital Clean. However, Asbury Automotive is 1.26 times more volatile than Capital Clean Energy. It trades about 0.05 of its potential returns per unit of risk. Capital Clean Energy is currently generating about 0.05 per unit of risk. If you would invest 17,036 in Asbury Automotive Group on September 5, 2024 and sell it today you would earn a total of 9,499 from holding Asbury Automotive Group or generate 55.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Asbury Automotive Group vs. Capital Clean Energy
Performance |
| Timeline |
| Asbury Automotive |
| Capital Clean Energy |
Asbury Automotive and Capital Clean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asbury Automotive and Capital Clean
The main advantage of trading using opposite Asbury Automotive and Capital Clean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asbury Automotive position performs unexpectedly, Capital Clean 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 Capital Clean will offset losses from the drop in Capital Clean's long position.| Asbury Automotive vs. Sonic Automotive | Asbury Automotive vs. Lithia Motors | Asbury Automotive vs. AutoNation | Asbury Automotive vs. Penske Automotive Group |
| Capital Clean vs. Natural Alternatives International | Capital Clean vs. Where Food Comes | Capital Clean vs. SunOpta | Capital Clean vs. Asbury 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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