Correlation Between Asbury Automotive and Dillards
Can any of the company-specific risk be diversified away by investing in both Asbury Automotive and Dillards 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 Dillards 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 Dillards, you can compare the effects of market volatilities on Asbury Automotive and Dillards 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 Dillards. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asbury Automotive and Dillards.
Diversification Opportunities for Asbury Automotive and Dillards
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Asbury and Dillards is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Asbury Automotive Group and Dillards in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dillards 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 Dillards. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dillards has no effect on the direction of Asbury Automotive i.e., Asbury Automotive and Dillards go up and down completely randomly.
Pair Corralation between Asbury Automotive and Dillards
Considering the 90-day investment horizon Asbury Automotive is expected to generate 1.41 times less return on investment than Dillards. But when comparing it to its historical volatility, Asbury Automotive Group is 1.15 times less risky than Dillards. It trades about 0.04 of its potential returns per unit of risk. Dillards is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 34,296 in Dillards on August 27, 2024 and sell it today you would earn a total of 10,319 from holding Dillards or generate 30.09% 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. Dillards
Performance |
| Timeline |
| Asbury Automotive |
| Dillards |
Asbury Automotive and Dillards Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asbury Automotive and Dillards
The main advantage of trading using opposite Asbury Automotive and Dillards positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asbury Automotive position performs unexpectedly, Dillards 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 Dillards will offset losses from the drop in Dillards' long position.| Asbury Automotive vs. Kingsway Financial Services | Asbury Automotive vs. KAR Auction Services | Asbury Automotive vs. Cango Inc | Asbury Automotive vs. Vroom Inc |
| Dillards vs. Macys Inc | Dillards vs. Kohls Corp | Dillards vs. Marks Spencer Group | Dillards vs. Marks and Spencer |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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