Correlation Between Compania Cervecerias and Asbury Automotive
Can any of the company-specific risk be diversified away by investing in both Compania Cervecerias 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 Compania Cervecerias and Asbury Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compania Cervecerias Unidas and Asbury Automotive Group, you can compare the effects of market volatilities on Compania Cervecerias 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 Compania Cervecerias with a short position of Asbury Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compania Cervecerias and Asbury Automotive.
Diversification Opportunities for Compania Cervecerias and Asbury Automotive
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Compania and Asbury is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Compania Cervecerias Unidas and Asbury Automotive Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asbury Automotive and Compania Cervecerias 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 Compania Cervecerias Unidas 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 Compania Cervecerias i.e., Compania Cervecerias and Asbury Automotive go up and down completely randomly.
Pair Corralation between Compania Cervecerias and Asbury Automotive
Considering the 90-day investment horizon Compania Cervecerias is expected to generate 8.51 times less return on investment than Asbury Automotive. But when comparing it to its historical volatility, Compania Cervecerias Unidas is 1.2 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 0.06 of returns per unit of risk over similar time horizon. If you would invest 24,220 in Asbury Automotive Group on August 29, 2024 and sell it today you would earn a total of 1,783 from holding Asbury Automotive Group or generate 7.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compania Cervecerias Unidas vs. Asbury Automotive Group
Performance |
| Timeline |
| Compania Cervecerias |
| Asbury Automotive |
Compania Cervecerias and Asbury Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compania Cervecerias and Asbury Automotive
The main advantage of trading using opposite Compania Cervecerias and Asbury Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compania Cervecerias 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.| Compania Cervecerias vs. Fomento Economico Mexicano | Compania Cervecerias vs. Carlsberg AS | Compania Cervecerias vs. Molson Coors Beverage | Compania Cervecerias vs. Molson Coors Brewing |
| 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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