Correlation Between Asbury Automotive and Kite Realty
Can any of the company-specific risk be diversified away by investing in both Asbury Automotive and Kite Realty 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 Kite Realty 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 Kite Realty Group, you can compare the effects of market volatilities on Asbury Automotive and Kite Realty 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 Kite Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asbury Automotive and Kite Realty.
Diversification Opportunities for Asbury Automotive and Kite Realty
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Asbury and Kite is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Asbury Automotive Group and Kite Realty Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kite Realty Group 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 Kite Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kite Realty Group has no effect on the direction of Asbury Automotive i.e., Asbury Automotive and Kite Realty go up and down completely randomly.
Pair Corralation between Asbury Automotive and Kite Realty
Considering the 90-day investment horizon Asbury Automotive Group is expected to generate 2.27 times more return on investment than Kite Realty. However, Asbury Automotive is 2.27 times more volatile than Kite Realty Group. It trades about 0.35 of its potential returns per unit of risk. Kite Realty Group is currently generating about 0.29 per unit of risk. If you would invest 22,558 in Asbury Automotive Group on August 27, 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. Kite Realty Group
Performance |
| Timeline |
| Asbury Automotive |
| Kite Realty Group |
Asbury Automotive and Kite Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asbury Automotive and Kite Realty
The main advantage of trading using opposite Asbury Automotive and Kite Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asbury Automotive position performs unexpectedly, Kite Realty 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 Kite Realty will offset losses from the drop in Kite Realty'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 |
| Kite Realty vs. Site Centers Corp | Kite Realty vs. CBL Associates Properties | Kite Realty vs. Urban Edge Properties | Kite Realty vs. Acadia Realty Trust |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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