Correlation Between Asbury Automotive and Lear
Can any of the company-specific risk be diversified away by investing in both Asbury Automotive and Lear 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 Lear 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 Lear Corporation, you can compare the effects of market volatilities on Asbury Automotive and Lear 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 Lear. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asbury Automotive and Lear.
Diversification Opportunities for Asbury Automotive and Lear
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Asbury and Lear is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Asbury Automotive Group and Lear Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lear 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 Lear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lear has no effect on the direction of Asbury Automotive i.e., Asbury Automotive and Lear go up and down completely randomly.
Pair Corralation between Asbury Automotive and Lear
Considering the 90-day investment horizon Asbury Automotive Group is expected to generate 1.27 times more return on investment than Lear. However, Asbury Automotive is 1.27 times more volatile than Lear Corporation. It trades about 0.06 of its potential returns per unit of risk. Lear Corporation is currently generating about -0.09 per unit of risk. If you would invest 20,883 in Asbury Automotive Group on August 27, 2024 and sell it today you would earn a total of 5,247 from holding Asbury Automotive Group or generate 25.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Asbury Automotive Group vs. Lear Corp.
Performance |
| Timeline |
| Asbury Automotive |
| Lear |
Asbury Automotive and Lear Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asbury Automotive and Lear
The main advantage of trading using opposite Asbury Automotive and Lear positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asbury Automotive position performs unexpectedly, Lear 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 Lear will offset losses from the drop in Lear'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 |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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