Correlation Between Foot Locker and Asbury Automotive
Can any of the company-specific risk be diversified away by investing in both Foot Locker 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 Foot Locker and Asbury Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Foot Locker and Asbury Automotive Group, you can compare the effects of market volatilities on Foot Locker 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 Foot Locker with a short position of Asbury Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Foot Locker and Asbury Automotive.
Diversification Opportunities for Foot Locker and Asbury Automotive
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Foot and Asbury is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Foot Locker and Asbury Automotive Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asbury Automotive and Foot Locker 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 Foot Locker 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 Foot Locker i.e., Foot Locker and Asbury Automotive go up and down completely randomly.
Pair Corralation between Foot Locker and Asbury Automotive
Allowing for the 90-day total investment horizon Foot Locker is expected to generate 2.33 times more return on investment than Asbury Automotive. However, Foot Locker is 2.33 times more volatile than Asbury Automotive Group. It trades about 0.0 of its potential returns per unit of risk. Asbury Automotive Group is currently generating about -0.04 per unit of risk. If you would invest 2,250 in Foot Locker on September 18, 2024 and sell it today you would lose (24.00) from holding Foot Locker or give up 1.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Foot Locker vs. Asbury Automotive Group
Performance |
| Timeline |
| Foot Locker |
| Asbury Automotive |
Foot Locker and Asbury Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Foot Locker and Asbury Automotive
The main advantage of trading using opposite Foot Locker and Asbury Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Foot Locker 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.| Foot Locker vs. Abercrombie Fitch | Foot Locker vs. Urban Outfitters | Foot Locker vs. Childrens Place | Foot Locker vs. American Eagle Outfitters |
| 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
Other Complementary Tools
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities |