Correlation Between Hooker Furniture and Asbury Automotive
Can any of the company-specific risk be diversified away by investing in both Hooker Furniture 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 Hooker Furniture and Asbury Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hooker Furniture and Asbury Automotive Group, you can compare the effects of market volatilities on Hooker Furniture 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 Hooker Furniture with a short position of Asbury Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hooker Furniture and Asbury Automotive.
Diversification Opportunities for Hooker Furniture and Asbury Automotive
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hooker and Asbury is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Hooker Furniture and Asbury Automotive Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asbury Automotive and Hooker Furniture 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 Hooker Furniture 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 Hooker Furniture i.e., Hooker Furniture and Asbury Automotive go up and down completely randomly.
Pair Corralation between Hooker Furniture and Asbury Automotive
Given the investment horizon of 90 days Hooker Furniture is expected to generate 1.43 times more return on investment than Asbury Automotive. However, Hooker Furniture is 1.43 times more volatile than Asbury Automotive Group. It trades about 0.27 of its potential returns per unit of risk. Asbury Automotive Group is currently generating about 0.35 per unit of risk. If you would invest 1,605 in Hooker Furniture on August 28, 2024 and sell it today you would earn a total of 306.00 from holding Hooker Furniture or generate 19.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hooker Furniture vs. Asbury Automotive Group
Performance |
| Timeline |
| Hooker Furniture |
| Asbury Automotive |
Hooker Furniture and Asbury Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hooker Furniture and Asbury Automotive
The main advantage of trading using opposite Hooker Furniture and Asbury Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hooker Furniture 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.| Hooker Furniture vs. Bassett Furniture Industries | Hooker Furniture vs. Natuzzi SpA | Hooker Furniture vs. Flexsteel Industries | Hooker Furniture vs. Hamilton Beach Brands |
| Asbury Automotive vs. Kingsway Financial Services | Asbury Automotive vs. KAR Auction Services | Asbury Automotive vs. Cango Inc | Asbury Automotive vs. Vroom Inc |
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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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