Correlation Between Asbury Automotive and Envela Corp
Can any of the company-specific risk be diversified away by investing in both Asbury Automotive and Envela Corp 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 Envela Corp 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 Envela Corp, you can compare the effects of market volatilities on Asbury Automotive and Envela Corp 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 Envela Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asbury Automotive and Envela Corp.
Diversification Opportunities for Asbury Automotive and Envela Corp
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Asbury and Envela is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Asbury Automotive Group and Envela Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Envela Corp 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 Envela Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Envela Corp has no effect on the direction of Asbury Automotive i.e., Asbury Automotive and Envela Corp go up and down completely randomly.
Pair Corralation between Asbury Automotive and Envela Corp
Considering the 90-day investment horizon Asbury Automotive is expected to generate 1.31 times less return on investment than Envela Corp. In addition to that, Asbury Automotive is 1.29 times more volatile than Envela Corp. It trades about 0.31 of its total potential returns per unit of risk. Envela Corp is currently generating about 0.52 per unit of volatility. If you would invest 535.00 in Envela Corp on August 29, 2024 and sell it today you would earn a total of 124.00 from holding Envela Corp or generate 23.18% 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. Envela Corp
Performance |
| Timeline |
| Asbury Automotive |
| Envela Corp |
Asbury Automotive and Envela Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asbury Automotive and Envela Corp
The main advantage of trading using opposite Asbury Automotive and Envela Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asbury Automotive position performs unexpectedly, Envela Corp 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 Envela Corp will offset losses from the drop in Envela Corp's long position.| Asbury Automotive vs. Sonic Automotive | Asbury Automotive vs. Lithia Motors | Asbury Automotive vs. AutoNation | Asbury Automotive vs. Penske Automotive Group |
| Envela Corp vs. Movado Group | Envela Corp vs. MYT Netherlands Parent | Envela Corp vs. Tapestry | Envela Corp vs. Capri Holdings |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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