Correlation Between Arrow Electronics and Asbury Automotive
Can any of the company-specific risk be diversified away by investing in both Arrow Electronics 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 Arrow Electronics and Asbury Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arrow Electronics and Asbury Automotive Group, you can compare the effects of market volatilities on Arrow Electronics 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 Arrow Electronics with a short position of Asbury Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arrow Electronics and Asbury Automotive.
Diversification Opportunities for Arrow Electronics and Asbury Automotive
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Arrow and Asbury is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Arrow Electronics and Asbury Automotive Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asbury Automotive and Arrow Electronics 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 Arrow Electronics 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 Arrow Electronics i.e., Arrow Electronics and Asbury Automotive go up and down completely randomly.
Pair Corralation between Arrow Electronics and Asbury Automotive
Considering the 90-day investment horizon Arrow Electronics is expected to generate 8.1 times less return on investment than Asbury Automotive. But when comparing it to its historical volatility, Arrow Electronics is 1.42 times less risky than Asbury Automotive. It trades about 0.01 of its potential returns per unit of risk. Asbury Automotive Group is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 18,941 in Asbury Automotive Group on August 26, 2024 and sell it today you would earn a total of 7,189 from holding Asbury Automotive Group or generate 37.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arrow Electronics vs. Asbury Automotive Group
Performance |
| Timeline |
| Arrow Electronics |
| Asbury Automotive |
Arrow Electronics and Asbury Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arrow Electronics and Asbury Automotive
The main advantage of trading using opposite Arrow Electronics and Asbury Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arrow Electronics 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.| Arrow Electronics vs. Insight Enterprises | Arrow Electronics vs. Synnex | Arrow Electronics vs. Climb Global Solutions | Arrow Electronics vs. ScanSource |
| Asbury Automotive vs. Kingsway Financial Services | Asbury Automotive vs. KAR Auction Services | Asbury Automotive vs. Cango Inc | Asbury Automotive vs. Vroom Inc |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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