Correlation Between Asbury Automotive and Roma Green
Can any of the company-specific risk be diversified away by investing in both Asbury Automotive and Roma Green 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 Roma Green 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 Roma Green Finance, you can compare the effects of market volatilities on Asbury Automotive and Roma Green 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 Roma Green. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asbury Automotive and Roma Green.
Diversification Opportunities for Asbury Automotive and Roma Green
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Asbury and Roma is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Asbury Automotive Group and Roma Green Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roma Green Finance 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 Roma Green. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roma Green Finance has no effect on the direction of Asbury Automotive i.e., Asbury Automotive and Roma Green go up and down completely randomly.
Pair Corralation between Asbury Automotive and Roma Green
Considering the 90-day investment horizon Asbury Automotive Group is expected to under-perform the Roma Green. But the stock apears to be less risky and, when comparing its historical volatility, Asbury Automotive Group is 5.05 times less risky than Roma Green. The stock trades about -0.47 of its potential returns per unit of risk. The Roma Green Finance is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 68.00 in Roma Green Finance on December 8, 2024 and sell it today you would earn a total of 7.20 from holding Roma Green Finance or generate 10.59% 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. Roma Green Finance
Performance |
| Timeline |
| Asbury Automotive |
| Roma Green Finance |
Asbury Automotive and Roma Green Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asbury Automotive and Roma Green
The main advantage of trading using opposite Asbury Automotive and Roma Green positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asbury Automotive position performs unexpectedly, Roma Green 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 Roma Green will offset losses from the drop in Roma Green's long position.| Asbury Automotive vs. Sonic Automotive | ||
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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