Correlation Between Asbury Automotive and Playtech Plc
Can any of the company-specific risk be diversified away by investing in both Asbury Automotive and Playtech Plc 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 Playtech Plc 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 Playtech plc, you can compare the effects of market volatilities on Asbury Automotive and Playtech Plc 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 Playtech Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asbury Automotive and Playtech Plc.
Diversification Opportunities for Asbury Automotive and Playtech Plc
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Asbury and Playtech is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Asbury Automotive Group and Playtech plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Playtech plc 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 Playtech Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Playtech plc has no effect on the direction of Asbury Automotive i.e., Asbury Automotive and Playtech Plc go up and down completely randomly.
Pair Corralation between Asbury Automotive and Playtech Plc
Considering the 90-day investment horizon Asbury Automotive is expected to generate 3.85 times less return on investment than Playtech Plc. But when comparing it to its historical volatility, Asbury Automotive Group is 1.07 times less risky than Playtech Plc. It trades about 0.03 of its potential returns per unit of risk. Playtech plc is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 528.00 in Playtech plc on September 14, 2024 and sell it today you would earn a total of 415.00 from holding Playtech plc or generate 78.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Asbury Automotive Group vs. Playtech plc
Performance |
| Timeline |
| Asbury Automotive |
| Playtech plc |
Asbury Automotive and Playtech Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asbury Automotive and Playtech Plc
The main advantage of trading using opposite Asbury Automotive and Playtech Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asbury Automotive position performs unexpectedly, Playtech Plc 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 Playtech Plc will offset losses from the drop in Playtech Plc's long position.| Asbury Automotive vs. Sonic Automotive | Asbury Automotive vs. Lithia Motors | Asbury Automotive vs. AutoNation | Asbury Automotive vs. Penske Automotive Group |
| Playtech Plc vs. Pinterest | Playtech Plc vs. Kandi Technologies Group | Playtech Plc vs. Loandepot | Playtech Plc vs. Grupo Televisa SAB |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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