Correlation Between Asbury Automotive and Teradyne
Can any of the company-specific risk be diversified away by investing in both Asbury Automotive and Teradyne 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 Teradyne 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 Teradyne, you can compare the effects of market volatilities on Asbury Automotive and Teradyne 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 Teradyne. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asbury Automotive and Teradyne.
Diversification Opportunities for Asbury Automotive and Teradyne
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Asbury and Teradyne is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Asbury Automotive Group and Teradyne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teradyne 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 Teradyne. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teradyne has no effect on the direction of Asbury Automotive i.e., Asbury Automotive and Teradyne go up and down completely randomly.
Pair Corralation between Asbury Automotive and Teradyne
Considering the 90-day investment horizon Asbury Automotive Group is expected to generate 0.96 times more return on investment than Teradyne. However, Asbury Automotive Group is 1.05 times less risky than Teradyne. It trades about 0.03 of its potential returns per unit of risk. Teradyne 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. Teradyne
Performance |
| Timeline |
| Asbury Automotive |
| Teradyne |
Asbury Automotive and Teradyne Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asbury Automotive and Teradyne
The main advantage of trading using opposite Asbury Automotive and Teradyne positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asbury Automotive position performs unexpectedly, Teradyne 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 Teradyne will offset losses from the drop in Teradyne's long position.| Asbury Automotive vs. Sonic Automotive | Asbury Automotive vs. Lithia Motors | Asbury Automotive vs. AutoNation | Asbury Automotive vs. Penske Automotive Group |
| Teradyne vs. IPG Photonics | Teradyne vs. Ultra Clean Holdings | Teradyne vs. Onto Innovation | Teradyne vs. Cohu Inc |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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