Correlation Between AutoNation and J Long
Can any of the company-specific risk be diversified away by investing in both AutoNation and J Long 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 J Long into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AutoNation and J Long Group Limited, you can compare the effects of market volatilities on AutoNation and J Long 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 J Long. Check out your portfolio center. Please also check ongoing floating volatility patterns of AutoNation and J Long.
Diversification Opportunities for AutoNation and J Long
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between AutoNation and J Long is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding AutoNation and J Long Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on J Long Group 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 J Long. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of J Long Group has no effect on the direction of AutoNation i.e., AutoNation and J Long go up and down completely randomly.
Pair Corralation between AutoNation and J Long
Allowing for the 90-day total investment horizon AutoNation is expected to generate 0.19 times more return on investment than J Long. However, AutoNation is 5.19 times less risky than J Long. It trades about 0.04 of its potential returns per unit of risk. J Long Group Limited is currently generating about -0.02 per unit of risk. If you would invest 13,651 in AutoNation on November 19, 2024 and sell it today you would earn a total of 5,617 from holding AutoNation or generate 41.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 54.23% |
| Values | Daily Returns |
AutoNation vs. J Long Group Limited
Performance |
| Timeline |
| AutoNation |
| J Long Group |
AutoNation and J Long Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AutoNation and J Long
The main advantage of trading using opposite AutoNation and J Long positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AutoNation position performs unexpectedly, J Long 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 J Long will offset losses from the drop in J Long's long position.| AutoNation vs. Sonic Automotive | AutoNation vs. Lithia Motors | AutoNation vs. Asbury Automotive Group | AutoNation vs. Penske Automotive Group |
| J Long vs. High Performance Beverages | J Long vs. Sachem Capital Corp | J Long vs. Molson Coors Brewing | J Long vs. Canaf Investments |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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