Correlation Between Air Transport and Asbury Automotive
Can any of the company-specific risk be diversified away by investing in both Air Transport 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 Air Transport and Asbury Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Transport Services and Asbury Automotive Group, you can compare the effects of market volatilities on Air Transport 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 Air Transport with a short position of Asbury Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Transport and Asbury Automotive.
Diversification Opportunities for Air Transport and Asbury Automotive
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Air and Asbury is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Air Transport Services and Asbury Automotive Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asbury Automotive and Air Transport 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 Air Transport Services 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 Air Transport i.e., Air Transport and Asbury Automotive go up and down completely randomly.
Pair Corralation between Air Transport and Asbury Automotive
Given the investment horizon of 90 days Air Transport Services is expected to generate 1.48 times more return on investment than Asbury Automotive. However, Air Transport is 1.48 times more volatile than Asbury Automotive Group. It trades about 0.05 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 1,703 in Air Transport Services on September 14, 2024 and sell it today you would earn a total of 488.50 from holding Air Transport Services or generate 28.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Transport Services vs. Asbury Automotive Group
Performance |
| Timeline |
| Air Transport Services |
| Asbury Automotive |
Air Transport and Asbury Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Transport and Asbury Automotive
The main advantage of trading using opposite Air Transport and Asbury Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Transport 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.| Air Transport vs. Copa Holdings SA | Air Transport vs. SkyWest | Air Transport vs. Sun Country Airlines | Air Transport vs. Frontier Group Holdings |
| 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
Other Complementary Tools
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. |