Correlation Between Asbury Automotive and SEI Investments
Can any of the company-specific risk be diversified away by investing in both Asbury Automotive and SEI Investments 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 SEI Investments 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 SEI Investments, you can compare the effects of market volatilities on Asbury Automotive and SEI Investments 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 SEI Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asbury Automotive and SEI Investments.
Diversification Opportunities for Asbury Automotive and SEI Investments
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Asbury and SEI is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Asbury Automotive Group and SEI Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEI Investments 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 SEI Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEI Investments has no effect on the direction of Asbury Automotive i.e., Asbury Automotive and SEI Investments go up and down completely randomly.
Pair Corralation between Asbury Automotive and SEI Investments
Considering the 90-day investment horizon Asbury Automotive Group is expected to generate 1.79 times more return on investment than SEI Investments. However, Asbury Automotive is 1.79 times more volatile than SEI Investments. It trades about 0.31 of its potential returns per unit of risk. SEI Investments is currently generating about 0.3 per unit of risk. If you would invest 22,514 in Asbury Automotive Group on August 25, 2024 and sell it today you would earn a total of 3,616 from holding Asbury Automotive Group or generate 16.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Asbury Automotive Group vs. SEI Investments
Performance |
| Timeline |
| Asbury Automotive |
| SEI Investments |
Asbury Automotive and SEI Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asbury Automotive and SEI Investments
The main advantage of trading using opposite Asbury Automotive and SEI Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asbury Automotive position performs unexpectedly, SEI Investments 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 SEI Investments will offset losses from the drop in SEI Investments' long position.The idea behind Asbury Automotive Group and SEI Investments pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| SEI Investments vs. Commerce Bancshares | SEI Investments vs. RLI Corp | SEI Investments vs. Westamerica Bancorporation | SEI Investments vs. Brown Brown |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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