Correlation Between Citizens and Asbury Automotive
Can any of the company-specific risk be diversified away by investing in both Citizens 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 Citizens and Asbury Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citizens and Asbury Automotive Group, you can compare the effects of market volatilities on Citizens 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 Citizens with a short position of Asbury Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citizens and Asbury Automotive.
Diversification Opportunities for Citizens and Asbury Automotive
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Citizens and Asbury is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Citizens and Asbury Automotive Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asbury Automotive and Citizens 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 Citizens 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 Citizens i.e., Citizens and Asbury Automotive go up and down completely randomly.
Pair Corralation between Citizens and Asbury Automotive
Considering the 90-day investment horizon Citizens is expected to generate 1.79 times more return on investment than Asbury Automotive. However, Citizens is 1.79 times more volatile than Asbury Automotive Group. It trades about 0.06 of its potential returns per unit of risk. Asbury Automotive Group is currently generating about 0.05 per unit of risk. If you would invest 304.00 in Citizens on September 4, 2024 and sell it today you would earn a total of 142.00 from holding Citizens or generate 46.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citizens vs. Asbury Automotive Group
Performance |
| Timeline |
| Citizens |
| Asbury Automotive |
Citizens and Asbury Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citizens and Asbury Automotive
The main advantage of trading using opposite Citizens and Asbury Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citizens 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.| Citizens vs. CNO Financial Group | Citizens vs. Brighthouse Financial | Citizens vs. FG Annuities Life | Citizens vs. Prudential Public Limited |
| 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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