Correlation Between Asbury Automotive and Wendys
Can any of the company-specific risk be diversified away by investing in both Asbury Automotive and Wendys 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 Wendys 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 The Wendys Co, you can compare the effects of market volatilities on Asbury Automotive and Wendys 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 Wendys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asbury Automotive and Wendys.
Diversification Opportunities for Asbury Automotive and Wendys
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Asbury and Wendys is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Asbury Automotive Group and The Wendys Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Wendys 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 Wendys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Wendys has no effect on the direction of Asbury Automotive i.e., Asbury Automotive and Wendys go up and down completely randomly.
Pair Corralation between Asbury Automotive and Wendys
Considering the 90-day investment horizon Asbury Automotive Group is expected to generate 1.6 times more return on investment than Wendys. However, Asbury Automotive is 1.6 times more volatile than The Wendys Co. It trades about 0.05 of its potential returns per unit of risk. The Wendys Co is currently generating about -0.01 per unit of risk. If you would invest 17,577 in Asbury Automotive Group on September 3, 2024 and sell it today you would earn a total of 8,406 from holding Asbury Automotive Group or generate 47.82% 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. The Wendys Co
Performance |
| Timeline |
| Asbury Automotive |
| The Wendys |
Asbury Automotive and Wendys Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asbury Automotive and Wendys
The main advantage of trading using opposite Asbury Automotive and Wendys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asbury Automotive position performs unexpectedly, Wendys 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 Wendys will offset losses from the drop in Wendys' long position.| Asbury Automotive vs. Sonic Automotive | Asbury Automotive vs. Lithia Motors | Asbury Automotive vs. AutoNation | Asbury Automotive vs. Penske Automotive Group |
| Wendys vs. Highway Holdings Limited | Wendys vs. QCR Holdings | Wendys vs. Partner Communications | Wendys vs. Acumen Pharmaceuticals |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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