Correlation Between Aramark Holdings and Asbury Automotive
Can any of the company-specific risk be diversified away by investing in both Aramark Holdings 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 Aramark Holdings and Asbury Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aramark Holdings and Asbury Automotive Group, you can compare the effects of market volatilities on Aramark Holdings 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 Aramark Holdings with a short position of Asbury Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aramark Holdings and Asbury Automotive.
Diversification Opportunities for Aramark Holdings and Asbury Automotive
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Aramark and Asbury is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Aramark Holdings and Asbury Automotive Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asbury Automotive and Aramark Holdings 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 Aramark Holdings 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 Aramark Holdings i.e., Aramark Holdings and Asbury Automotive go up and down completely randomly.
Pair Corralation between Aramark Holdings and Asbury Automotive
Given the investment horizon of 90 days Aramark Holdings is expected to generate 0.73 times more return on investment than Asbury Automotive. However, Aramark Holdings is 1.38 times less risky than Asbury Automotive. It trades about 0.06 of its potential returns per unit of risk. Asbury Automotive Group is currently generating about 0.03 per unit of risk. If you would invest 2,894 in Aramark Holdings on August 31, 2024 and sell it today you would earn a total of 1,175 from holding Aramark Holdings or generate 40.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aramark Holdings vs. Asbury Automotive Group
Performance |
| Timeline |
| Aramark Holdings |
| Asbury Automotive |
Aramark Holdings and Asbury Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aramark Holdings and Asbury Automotive
The main advantage of trading using opposite Aramark Holdings and Asbury Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aramark Holdings 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.| Aramark Holdings vs. Civeo Corp | Aramark Holdings vs. ABM Industries Incorporated | Aramark Holdings vs. ADM Endeavors | Aramark Holdings vs. Maximus |
| 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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