Correlation Between Asbury Automotive and Definitive Healthcare
Can any of the company-specific risk be diversified away by investing in both Asbury Automotive and Definitive Healthcare 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 Definitive Healthcare 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 Definitive Healthcare Corp, you can compare the effects of market volatilities on Asbury Automotive and Definitive Healthcare 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 Definitive Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asbury Automotive and Definitive Healthcare.
Diversification Opportunities for Asbury Automotive and Definitive Healthcare
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Asbury and Definitive is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Asbury Automotive Group and Definitive Healthcare Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Definitive Healthcare 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 Definitive Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Definitive Healthcare has no effect on the direction of Asbury Automotive i.e., Asbury Automotive and Definitive Healthcare go up and down completely randomly.
Pair Corralation between Asbury Automotive and Definitive Healthcare
Considering the 90-day investment horizon Asbury Automotive is expected to generate 1.6 times less return on investment than Definitive Healthcare. But when comparing it to its historical volatility, Asbury Automotive Group is 1.19 times less risky than Definitive Healthcare. It trades about 0.22 of its potential returns per unit of risk. Definitive Healthcare Corp is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 408.00 in Definitive Healthcare Corp on September 3, 2024 and sell it today you would earn a total of 65.00 from holding Definitive Healthcare Corp or generate 15.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Asbury Automotive Group vs. Definitive Healthcare Corp
Performance |
| Timeline |
| Asbury Automotive |
| Definitive Healthcare |
Asbury Automotive and Definitive Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asbury Automotive and Definitive Healthcare
The main advantage of trading using opposite Asbury Automotive and Definitive Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asbury Automotive position performs unexpectedly, Definitive Healthcare 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 Definitive Healthcare will offset losses from the drop in Definitive Healthcare's long position.| Asbury Automotive vs. Sonic Automotive | Asbury Automotive vs. Lithia Motors | Asbury Automotive vs. AutoNation | Asbury Automotive vs. Penske Automotive Group |
| Definitive Healthcare vs. National Research Corp | Definitive Healthcare vs. Evolent Health | Definitive Healthcare vs. Simulations Plus | Definitive Healthcare vs. Privia Health 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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