Correlation Between Designer Brands and Asbury Automotive
Can any of the company-specific risk be diversified away by investing in both Designer Brands 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 Designer Brands and Asbury Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Designer Brands and Asbury Automotive Group, you can compare the effects of market volatilities on Designer Brands 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 Designer Brands with a short position of Asbury Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Designer Brands and Asbury Automotive.
Diversification Opportunities for Designer Brands and Asbury Automotive
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Designer and Asbury is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Designer Brands and Asbury Automotive Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asbury Automotive and Designer Brands 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 Designer Brands 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 Designer Brands i.e., Designer Brands and Asbury Automotive go up and down completely randomly.
Pair Corralation between Designer Brands and Asbury Automotive
Considering the 90-day investment horizon Designer Brands is expected to generate 3.22 times more return on investment than Asbury Automotive. However, Designer Brands is 3.22 times more volatile than Asbury Automotive Group. It trades about 0.02 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 573.00 in Designer Brands on October 19, 2024 and sell it today you would lose (1.00) from holding Designer Brands or give up 0.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Designer Brands vs. Asbury Automotive Group
Performance |
| Timeline |
| Designer Brands |
| Asbury Automotive |
Designer Brands and Asbury Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Designer Brands and Asbury Automotive
The main advantage of trading using opposite Designer Brands and Asbury Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Designer Brands 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.| Designer Brands vs. Qurate Retail Series | Designer Brands vs. Hour Loop | Designer Brands vs. Solo Brands | Designer Brands vs. 1StdibsCom |
| 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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