Correlation Between Asbury Automotive and Rocky Brands
Can any of the company-specific risk be diversified away by investing in both Asbury Automotive and Rocky Brands 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 Rocky Brands 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 Rocky Brands, you can compare the effects of market volatilities on Asbury Automotive and Rocky Brands 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 Rocky Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asbury Automotive and Rocky Brands.
Diversification Opportunities for Asbury Automotive and Rocky Brands
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Asbury and Rocky is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Asbury Automotive Group and Rocky Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rocky Brands 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 Rocky Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rocky Brands has no effect on the direction of Asbury Automotive i.e., Asbury Automotive and Rocky Brands go up and down completely randomly.
Pair Corralation between Asbury Automotive and Rocky Brands
Considering the 90-day investment horizon Asbury Automotive Group is expected to generate 0.55 times more return on investment than Rocky Brands. However, Asbury Automotive Group is 1.81 times less risky than Rocky Brands. It trades about 0.03 of its potential returns per unit of risk. Rocky Brands is currently generating about 0.02 per unit of risk. If you would invest 23,224 in Asbury Automotive Group on November 2, 2024 and sell it today you would earn a total of 6,218 from holding Asbury Automotive Group or generate 26.77% 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. Rocky Brands
Performance |
| Timeline |
| Asbury Automotive |
| Rocky Brands |
Asbury Automotive and Rocky Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asbury Automotive and Rocky Brands
The main advantage of trading using opposite Asbury Automotive and Rocky Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asbury Automotive position performs unexpectedly, Rocky Brands 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 Rocky Brands will offset losses from the drop in Rocky Brands' long position.| Asbury Automotive vs. Sonic Automotive | Asbury Automotive vs. Lithia Motors | Asbury Automotive vs. AutoNation | Asbury Automotive vs. Penske Automotive Group |
| Rocky Brands vs. Vera Bradley | Rocky Brands vs. Steven Madden | Rocky Brands vs. Wolverine World Wide | Rocky Brands vs. Caleres |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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