Correlation Between Asbury Automotive and MGIC Investment
Can any of the company-specific risk be diversified away by investing in both Asbury Automotive and MGIC Investment 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 MGIC Investment 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 MGIC Investment Corp, you can compare the effects of market volatilities on Asbury Automotive and MGIC Investment 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 MGIC Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asbury Automotive and MGIC Investment.
Diversification Opportunities for Asbury Automotive and MGIC Investment
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Asbury and MGIC is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Asbury Automotive Group and MGIC Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MGIC Investment Corp 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 MGIC Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MGIC Investment Corp has no effect on the direction of Asbury Automotive i.e., Asbury Automotive and MGIC Investment go up and down completely randomly.
Pair Corralation between Asbury Automotive and MGIC Investment
Considering the 90-day investment horizon Asbury Automotive Group is expected to generate 1.6 times more return on investment than MGIC Investment. However, Asbury Automotive is 1.6 times more volatile than MGIC Investment Corp. It trades about 0.26 of its potential returns per unit of risk. MGIC Investment Corp is currently generating about 0.35 per unit of risk. If you would invest 23,698 in Asbury Automotive Group on September 5, 2024 and sell it today you would earn a total of 2,837 from holding Asbury Automotive Group or generate 11.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Asbury Automotive Group vs. MGIC Investment Corp
Performance |
| Timeline |
| Asbury Automotive |
| MGIC Investment Corp |
Asbury Automotive and MGIC Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asbury Automotive and MGIC Investment
The main advantage of trading using opposite Asbury Automotive and MGIC Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asbury Automotive position performs unexpectedly, MGIC Investment 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 MGIC Investment will offset losses from the drop in MGIC Investment's long position.| Asbury Automotive vs. Sonic Automotive | Asbury Automotive vs. Lithia Motors | Asbury Automotive vs. AutoNation | Asbury Automotive vs. Penske Automotive Group |
| MGIC Investment vs. MBIA Inc | MGIC Investment vs. NMI Holdings | MGIC Investment vs. Essent Group | MGIC Investment vs. Assured Guaranty |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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