Correlation Between Asbury Automotive and Pekin Life
Can any of the company-specific risk be diversified away by investing in both Asbury Automotive and Pekin Life 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 Pekin Life 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 Pekin Life Insurance, you can compare the effects of market volatilities on Asbury Automotive and Pekin Life 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 Pekin Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asbury Automotive and Pekin Life.
Diversification Opportunities for Asbury Automotive and Pekin Life
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Asbury and Pekin is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Asbury Automotive Group and Pekin Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pekin Life Insurance 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 Pekin Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pekin Life Insurance has no effect on the direction of Asbury Automotive i.e., Asbury Automotive and Pekin Life go up and down completely randomly.
Pair Corralation between Asbury Automotive and Pekin Life
Considering the 90-day investment horizon Asbury Automotive Group is expected to generate 1.37 times more return on investment than Pekin Life. However, Asbury Automotive is 1.37 times more volatile than Pekin Life Insurance. It trades about 0.04 of its potential returns per unit of risk. Pekin Life Insurance is currently generating about 0.01 per unit of risk. If you would invest 18,118 in Asbury Automotive Group on August 30, 2024 and sell it today you would earn a total of 7,885 from holding Asbury Automotive Group or generate 43.52% 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. Pekin Life Insurance
Performance |
| Timeline |
| Asbury Automotive |
| Pekin Life Insurance |
Asbury Automotive and Pekin Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asbury Automotive and Pekin Life
The main advantage of trading using opposite Asbury Automotive and Pekin Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asbury Automotive position performs unexpectedly, Pekin Life 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 Pekin Life will offset losses from the drop in Pekin Life's long position.| Asbury Automotive vs. Sonic Automotive | Asbury Automotive vs. Lithia Motors | Asbury Automotive vs. AutoNation | Asbury Automotive vs. Penske Automotive Group |
| Pekin Life vs. Invesco High Income | Pekin Life vs. Blackrock Muniholdings Ny | Pekin Life vs. Nuveen California Select | Pekin Life vs. MFS Investment Grade |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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