Correlation Between Analog Devices and Asbury Automotive
Can any of the company-specific risk be diversified away by investing in both Analog Devices and Asbury Automotive 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 Analog Devices and Asbury Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Analog Devices and Asbury Automotive Group, you can compare the effects of market volatilities on Analog Devices and Asbury Automotive 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 Analog Devices with a short position of Asbury Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Analog Devices and Asbury Automotive.
Diversification Opportunities for Analog Devices and Asbury Automotive
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Analog and Asbury is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Analog Devices and Asbury Automotive Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asbury Automotive and Analog Devices 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 Analog Devices are associated (or correlated) with Asbury Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asbury Automotive has no effect on the direction of Analog Devices i.e., Analog Devices and Asbury Automotive go up and down completely randomly.
Pair Corralation between Analog Devices and Asbury Automotive
Considering the 90-day investment horizon Analog Devices is expected to generate 1.09 times more return on investment than Asbury Automotive. However, Analog Devices is 1.09 times more volatile than Asbury Automotive Group. It trades about 0.13 of its potential returns per unit of risk. Asbury Automotive Group is currently generating about -0.01 per unit of risk. If you would invest 21,178 in Analog Devices on October 21, 2024 and sell it today you would earn a total of 738.00 from holding Analog Devices or generate 3.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Analog Devices vs. Asbury Automotive Group
Performance |
| Timeline |
| Analog Devices |
| Asbury Automotive |
Analog Devices and Asbury Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Analog Devices and Asbury Automotive
The main advantage of trading using opposite Analog Devices and Asbury Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Analog Devices position performs unexpectedly, Asbury Automotive 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 Asbury Automotive will offset losses from the drop in Asbury Automotive's long position.| Analog Devices vs. NXP Semiconductors NV | Analog Devices vs. Qualcomm Incorporated | Analog Devices vs. Broadcom | Analog Devices vs. Microchip Technology |
| Asbury Automotive vs. Sonic Automotive | Asbury Automotive vs. Lithia Motors | Asbury Automotive vs. AutoNation | Asbury Automotive vs. Penske Automotive Group |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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