Correlation Between Aerofoam Metals and Asbury Automotive
Can any of the company-specific risk be diversified away by investing in both Aerofoam Metals 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 Aerofoam Metals and Asbury Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aerofoam Metals and Asbury Automotive Group, you can compare the effects of market volatilities on Aerofoam Metals 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 Aerofoam Metals with a short position of Asbury Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aerofoam Metals and Asbury Automotive.
Diversification Opportunities for Aerofoam Metals and Asbury Automotive
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Aerofoam and Asbury is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Aerofoam Metals and Asbury Automotive Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asbury Automotive and Aerofoam Metals 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 Aerofoam Metals 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 Aerofoam Metals i.e., Aerofoam Metals and Asbury Automotive go up and down completely randomly.
Pair Corralation between Aerofoam Metals and Asbury Automotive
If you would invest 24,168 in Asbury Automotive Group on August 28, 2024 and sell it today you would earn a total of 2,514 from holding Asbury Automotive Group or generate 10.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aerofoam Metals vs. Asbury Automotive Group
Performance |
| Timeline |
| Aerofoam Metals |
| Asbury Automotive |
Aerofoam Metals and Asbury Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aerofoam Metals and Asbury Automotive
The main advantage of trading using opposite Aerofoam Metals and Asbury Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aerofoam Metals 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.| Aerofoam Metals vs. FitLife Brands, Common | Aerofoam Metals vs. HUMANA INC | Aerofoam Metals vs. SCOR PK | Aerofoam Metals vs. Aquagold International |
| 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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