Correlation Between Group 1 and One Group
Can any of the company-specific risk be diversified away by investing in both Group 1 and One Group 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 Group 1 and One Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Group 1 Automotive and One Group Hospitality, you can compare the effects of market volatilities on Group 1 and One Group 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 Group 1 with a short position of One Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Group 1 and One Group.
Diversification Opportunities for Group 1 and One Group
Very good diversification
The 3 months correlation between Group and One is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Group 1 Automotive and One Group Hospitality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on One Group Hospitality and Group 1 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 Group 1 Automotive are associated (or correlated) with One Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of One Group Hospitality has no effect on the direction of Group 1 i.e., Group 1 and One Group go up and down completely randomly.
Pair Corralation between Group 1 and One Group
Considering the 90-day investment horizon Group 1 Automotive is expected to generate 0.54 times more return on investment than One Group. However, Group 1 Automotive is 1.86 times less risky than One Group. It trades about 0.36 of its potential returns per unit of risk. One Group Hospitality is currently generating about 0.03 per unit of risk. If you would invest 35,285 in Group 1 Automotive on August 28, 2024 and sell it today you would earn a total of 8,036 from holding Group 1 Automotive or generate 22.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Group 1 Automotive vs. One Group Hospitality
Performance |
| Timeline |
| Group 1 Automotive |
| One Group Hospitality |
Group 1 and One Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Group 1 and One Group
The main advantage of trading using opposite Group 1 and One Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Group 1 position performs unexpectedly, One Group 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 One Group will offset losses from the drop in One Group's long position.| Group 1 vs. Penske Automotive Group | Group 1 vs. Lithia Motors | Group 1 vs. AutoNation | Group 1 vs. Asbury Automotive Group |
| One Group vs. FAT Brands | One Group vs. Potbelly Co | One Group vs. BJs Restaurants | One Group vs. Rave Restaurant 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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