Correlation Between AutoNation and Arko Corp
Can any of the company-specific risk be diversified away by investing in both AutoNation and Arko Corp 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 AutoNation and Arko Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AutoNation and Arko Corp, you can compare the effects of market volatilities on AutoNation and Arko Corp 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 AutoNation with a short position of Arko Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of AutoNation and Arko Corp.
Diversification Opportunities for AutoNation and Arko Corp
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between AutoNation and Arko is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding AutoNation and Arko Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arko Corp and AutoNation 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 AutoNation are associated (or correlated) with Arko Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arko Corp has no effect on the direction of AutoNation i.e., AutoNation and Arko Corp go up and down completely randomly.
Pair Corralation between AutoNation and Arko Corp
Allowing for the 90-day total investment horizon AutoNation is expected to generate 0.42 times more return on investment than Arko Corp. However, AutoNation is 2.39 times less risky than Arko Corp. It trades about 0.38 of its potential returns per unit of risk. Arko Corp is currently generating about -0.13 per unit of risk. If you would invest 15,547 in AutoNation on September 1, 2024 and sell it today you would earn a total of 2,342 from holding AutoNation or generate 15.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 66.67% |
| Values | Daily Returns |
AutoNation vs. Arko Corp
Performance |
| Timeline |
| AutoNation |
| Arko Corp |
AutoNation and Arko Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AutoNation and Arko Corp
The main advantage of trading using opposite AutoNation and Arko Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AutoNation position performs unexpectedly, Arko Corp 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 Arko Corp will offset losses from the drop in Arko Corp's long position.| AutoNation vs. Sonic Automotive | AutoNation vs. Lithia Motors | AutoNation vs. Asbury Automotive Group | AutoNation vs. Penske Automotive Group |
| Arko Corp vs. Arko Corp | Arko Corp vs. Advantage Solutions | Arko Corp vs. CannBioRx Life Sciences | Arko Corp vs. GCM Grosvenor |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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