Correlation Between Asbury Automotive and KLA Tencor
Can any of the company-specific risk be diversified away by investing in both Asbury Automotive and KLA Tencor 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 KLA Tencor 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 KLA Tencor, you can compare the effects of market volatilities on Asbury Automotive and KLA Tencor 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 KLA Tencor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asbury Automotive and KLA Tencor.
Diversification Opportunities for Asbury Automotive and KLA Tencor
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Asbury and KLA is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Asbury Automotive Group and KLA Tencor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KLA Tencor 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 KLA Tencor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KLA Tencor has no effect on the direction of Asbury Automotive i.e., Asbury Automotive and KLA Tencor go up and down completely randomly.
Pair Corralation between Asbury Automotive and KLA Tencor
Considering the 90-day investment horizon Asbury Automotive Group is expected to generate 0.91 times more return on investment than KLA Tencor. However, Asbury Automotive Group is 1.1 times less risky than KLA Tencor. It trades about -0.24 of its potential returns per unit of risk. KLA Tencor is currently generating about -0.23 per unit of risk. If you would invest 24,792 in Asbury Automotive Group on January 7, 2025 and sell it today you would lose (3,534) from holding Asbury Automotive Group or give up 14.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Asbury Automotive Group vs. KLA Tencor
Performance |
| Timeline |
| Asbury Automotive |
| KLA Tencor |
Asbury Automotive and KLA Tencor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asbury Automotive and KLA Tencor
The main advantage of trading using opposite Asbury Automotive and KLA Tencor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asbury Automotive position performs unexpectedly, KLA Tencor 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 KLA Tencor will offset losses from the drop in KLA Tencor's long position.| Asbury Automotive vs. Sonic Automotive | Asbury Automotive vs. Lithia Motors | Asbury Automotive vs. AutoNation | Asbury Automotive vs. Penske Automotive Group |
| KLA Tencor vs. Applied Materials | KLA Tencor vs. ASML Holding NV | KLA Tencor vs. Axcelis Technologies | KLA Tencor vs. Teradyne |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
Other Complementary Tools
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios |