Correlation Between ASGN and Central Garden
Can any of the company-specific risk be diversified away by investing in both ASGN and Central Garden 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 ASGN and Central Garden into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ASGN Inc and Central Garden Pet, you can compare the effects of market volatilities on ASGN and Central Garden 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 ASGN with a short position of Central Garden. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASGN and Central Garden.
Diversification Opportunities for ASGN and Central Garden
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between ASGN and Central is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding ASGN Inc and Central Garden Pet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Garden Pet and ASGN 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 ASGN Inc are associated (or correlated) with Central Garden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Garden Pet has no effect on the direction of ASGN i.e., ASGN and Central Garden go up and down completely randomly.
Pair Corralation between ASGN and Central Garden
Given the investment horizon of 90 days ASGN Inc is expected to under-perform the Central Garden. In addition to that, ASGN is 1.84 times more volatile than Central Garden Pet. It trades about -0.03 of its total potential returns per unit of risk. Central Garden Pet is currently generating about 0.36 per unit of volatility. If you would invest 2,951 in Central Garden Pet on August 28, 2024 and sell it today you would earn a total of 371.00 from holding Central Garden Pet or generate 12.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
ASGN Inc vs. Central Garden Pet
Performance |
| Timeline |
| ASGN Inc |
| Central Garden Pet |
ASGN and Central Garden Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ASGN and Central Garden
The main advantage of trading using opposite ASGN and Central Garden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASGN position performs unexpectedly, Central Garden 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 Central Garden will offset losses from the drop in Central Garden's long position.The idea behind ASGN Inc and Central Garden Pet pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Central Garden vs. Unilever PLC ADR | Central Garden vs. Estee Lauder Companies | Central Garden vs. ELF Beauty | Central Garden vs. Coty 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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