Correlation Between Asbury Automotive and Valvoline
Can any of the company-specific risk be diversified away by investing in both Asbury Automotive and Valvoline 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 Valvoline 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 Valvoline, you can compare the effects of market volatilities on Asbury Automotive and Valvoline 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 Valvoline. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asbury Automotive and Valvoline.
Diversification Opportunities for Asbury Automotive and Valvoline
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Asbury and Valvoline is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Asbury Automotive Group and Valvoline in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valvoline 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 Valvoline. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valvoline has no effect on the direction of Asbury Automotive i.e., Asbury Automotive and Valvoline go up and down completely randomly.
Pair Corralation between Asbury Automotive and Valvoline
Considering the 90-day investment horizon Asbury Automotive Group is expected to generate 0.92 times more return on investment than Valvoline. However, Asbury Automotive Group is 1.09 times less risky than Valvoline. It trades about 0.28 of its potential returns per unit of risk. Valvoline is currently generating about -0.02 per unit of risk. If you would invest 22,798 in Asbury Automotive Group on September 2, 2024 and sell it today you would earn a total of 3,185 from holding Asbury Automotive Group or generate 13.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Asbury Automotive Group vs. Valvoline
Performance |
| Timeline |
| Asbury Automotive |
| Valvoline |
Asbury Automotive and Valvoline Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asbury Automotive and Valvoline
The main advantage of trading using opposite Asbury Automotive and Valvoline positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asbury Automotive position performs unexpectedly, Valvoline 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 Valvoline will offset losses from the drop in Valvoline's long position.| Asbury Automotive vs. Advance Auto Parts | Asbury Automotive vs. Tractor Supply | Asbury Automotive vs. Genuine Parts Co | Asbury Automotive vs. Five Below |
| Valvoline vs. Cosan SA ADR | Valvoline vs. Delek Energy | Valvoline vs. Crossamerica Partners LP | Valvoline vs. Par Pacific Holdings |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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