Correlation Between Asbury Automotive and Global Payments
Can any of the company-specific risk be diversified away by investing in both Asbury Automotive and Global Payments 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 Global Payments 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 Global Payments, you can compare the effects of market volatilities on Asbury Automotive and Global Payments 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 Global Payments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asbury Automotive and Global Payments.
Diversification Opportunities for Asbury Automotive and Global Payments
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Asbury and Global is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Asbury Automotive Group and Global Payments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Payments 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 Global Payments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Payments has no effect on the direction of Asbury Automotive i.e., Asbury Automotive and Global Payments go up and down completely randomly.
Pair Corralation between Asbury Automotive and Global Payments
Considering the 90-day investment horizon Asbury Automotive Group is expected to generate 1.04 times more return on investment than Global Payments. However, Asbury Automotive is 1.04 times more volatile than Global Payments. It trades about 0.35 of its potential returns per unit of risk. Global Payments is currently generating about 0.33 per unit of risk. If you would invest 22,558 in Asbury Automotive Group on August 28, 2024 and sell it today you would earn a total of 4,124 from holding Asbury Automotive Group or generate 18.28% 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. Global Payments
Performance |
| Timeline |
| Asbury Automotive |
| Global Payments |
Asbury Automotive and Global Payments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asbury Automotive and Global Payments
The main advantage of trading using opposite Asbury Automotive and Global Payments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asbury Automotive position performs unexpectedly, Global Payments 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 Global Payments will offset losses from the drop in Global Payments' long position.| Asbury Automotive vs. Sonic Automotive | Asbury Automotive vs. Lithia Motors | Asbury Automotive vs. AutoNation | Asbury Automotive vs. Penske Automotive Group |
| Global Payments vs. Copart Inc | Global Payments vs. ABM Industries Incorporated | Global Payments vs. Thomson Reuters Corp | Global Payments vs. Aramark 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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