Correlation Between Five Below and Asbury Automotive
Can any of the company-specific risk be diversified away by investing in both Five Below 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 Five Below and Asbury Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Five Below and Asbury Automotive Group, you can compare the effects of market volatilities on Five Below 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 Five Below with a short position of Asbury Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Five Below and Asbury Automotive.
Diversification Opportunities for Five Below and Asbury Automotive
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Five and Asbury is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Five Below and Asbury Automotive Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asbury Automotive and Five Below 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 Five Below 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 Five Below i.e., Five Below and Asbury Automotive go up and down completely randomly.
Pair Corralation between Five Below and Asbury Automotive
Given the investment horizon of 90 days Five Below is expected to under-perform the Asbury Automotive. In addition to that, Five Below is 1.56 times more volatile than Asbury Automotive Group. It trades about -0.07 of its total potential returns per unit of risk. Asbury Automotive Group is currently generating about 0.06 per unit of volatility. If you would invest 22,160 in Asbury Automotive Group on September 3, 2024 and sell it today you would earn a total of 3,823 from holding Asbury Automotive Group or generate 17.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Five Below vs. Asbury Automotive Group
Performance |
| Timeline |
| Five Below |
| Asbury Automotive |
Five Below and Asbury Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Five Below and Asbury Automotive
The main advantage of trading using opposite Five Below and Asbury Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Five Below 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.| Five Below vs. OReilly Automotive | Five Below vs. AutoZone | Five Below vs. Genuine Parts Co | Five Below vs. Williams Sonoma |
| 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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