Correlation Between Lands End and Asbury Automotive
Can any of the company-specific risk be diversified away by investing in both Lands End 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 Lands End and Asbury Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lands End and Asbury Automotive Group, you can compare the effects of market volatilities on Lands End 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 Lands End with a short position of Asbury Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lands End and Asbury Automotive.
Diversification Opportunities for Lands End and Asbury Automotive
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lands and Asbury is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Lands End and Asbury Automotive Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asbury Automotive and Lands End 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 Lands End 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 Lands End i.e., Lands End and Asbury Automotive go up and down completely randomly.
Pair Corralation between Lands End and Asbury Automotive
Allowing for the 90-day total investment horizon Lands End is expected to under-perform the Asbury Automotive. In addition to that, Lands End is 3.03 times more volatile than Asbury Automotive Group. It trades about -0.05 of its total potential returns per unit of risk. Asbury Automotive Group is currently generating about -0.04 per unit of volatility. If you would invest 25,590 in Asbury Automotive Group on September 18, 2024 and sell it today you would lose (360.00) from holding Asbury Automotive Group or give up 1.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lands End vs. Asbury Automotive Group
Performance |
| Timeline |
| Lands End |
| Asbury Automotive |
Lands End and Asbury Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lands End and Asbury Automotive
The main advantage of trading using opposite Lands End and Asbury Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lands End 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.| Lands End vs. Capri Holdings | Lands End vs. Movado Group | Lands End vs. Tapestry | Lands End vs. Brilliant Earth Group |
| 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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