Correlation Between Asbury Automotive and Diageo PLC
Can any of the company-specific risk be diversified away by investing in both Asbury Automotive and Diageo PLC 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 Diageo PLC 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 Diageo PLC ADR, you can compare the effects of market volatilities on Asbury Automotive and Diageo PLC 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 Diageo PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asbury Automotive and Diageo PLC.
Diversification Opportunities for Asbury Automotive and Diageo PLC
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Asbury and Diageo is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Asbury Automotive Group and Diageo PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diageo PLC ADR 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 Diageo PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diageo PLC ADR has no effect on the direction of Asbury Automotive i.e., Asbury Automotive and Diageo PLC go up and down completely randomly.
Pair Corralation between Asbury Automotive and Diageo PLC
Considering the 90-day investment horizon Asbury Automotive Group is expected to generate 1.68 times more return on investment than Diageo PLC. However, Asbury Automotive is 1.68 times more volatile than Diageo PLC ADR. It trades about 0.05 of its potential returns per unit of risk. Diageo PLC ADR is currently generating about -0.07 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 | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Asbury Automotive Group vs. Diageo PLC ADR
Performance |
| Timeline |
| Asbury Automotive |
| Diageo PLC ADR |
Asbury Automotive and Diageo PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asbury Automotive and Diageo PLC
The main advantage of trading using opposite Asbury Automotive and Diageo PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asbury Automotive position performs unexpectedly, Diageo PLC 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 Diageo PLC will offset losses from the drop in Diageo PLC's long position.| Asbury Automotive vs. Kingsway Financial Services | Asbury Automotive vs. KAR Auction Services | Asbury Automotive vs. Cango Inc | Asbury Automotive vs. Vroom Inc |
| Diageo PLC vs. Naked Wines plc | Diageo PLC vs. Andrew Peller Limited | Diageo PLC vs. Iconic Brands | Diageo PLC vs. Naked Wines plc |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
Other Complementary Tools
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance |