Correlation Between Asbury Automotive and Kingsway Financial
Can any of the company-specific risk be diversified away by investing in both Asbury Automotive and Kingsway Financial 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 Kingsway Financial 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 Kingsway Financial Services, you can compare the effects of market volatilities on Asbury Automotive and Kingsway Financial 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 Kingsway Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asbury Automotive and Kingsway Financial.
Diversification Opportunities for Asbury Automotive and Kingsway Financial
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Asbury and Kingsway is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Asbury Automotive Group and Kingsway Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingsway Financial 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 Kingsway Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingsway Financial has no effect on the direction of Asbury Automotive i.e., Asbury Automotive and Kingsway Financial go up and down completely randomly.
Pair Corralation between Asbury Automotive and Kingsway Financial
Considering the 90-day investment horizon Asbury Automotive Group is expected to generate 1.16 times more return on investment than Kingsway Financial. However, Asbury Automotive is 1.16 times more volatile than Kingsway Financial Services. It trades about 0.05 of its potential returns per unit of risk. Kingsway Financial Services is currently generating about 0.03 per unit of risk. If you would invest 17,896 in Asbury Automotive Group on August 28, 2024 and sell it today you would earn a total of 8,786 from holding Asbury Automotive Group or generate 49.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Asbury Automotive Group vs. Kingsway Financial Services
Performance |
| Timeline |
| Asbury Automotive |
| Kingsway Financial |
Asbury Automotive and Kingsway Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asbury Automotive and Kingsway Financial
The main advantage of trading using opposite Asbury Automotive and Kingsway Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asbury Automotive position performs unexpectedly, Kingsway Financial 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 Kingsway Financial will offset losses from the drop in Kingsway Financial'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 |
| Kingsway Financial vs. CarGurus | Kingsway Financial vs. KAR Auction Services | Kingsway Financial vs. Driven Brands Holdings | Kingsway Financial vs. Group 1 Automotive |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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