Correlation Between Life Time and Asbury Automotive
Can any of the company-specific risk be diversified away by investing in both Life Time 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 Life Time and Asbury Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Life Time Group and Asbury Automotive Group, you can compare the effects of market volatilities on Life Time 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 Life Time with a short position of Asbury Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Life Time and Asbury Automotive.
Diversification Opportunities for Life Time and Asbury Automotive
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Life and Asbury is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Life Time Group and Asbury Automotive Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asbury Automotive and Life Time 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 Life Time Group 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 Life Time i.e., Life Time and Asbury Automotive go up and down completely randomly.
Pair Corralation between Life Time and Asbury Automotive
Considering the 90-day investment horizon Life Time Group is expected to generate 1.14 times more return on investment than Asbury Automotive. However, Life Time is 1.14 times more volatile than Asbury Automotive Group. It trades about 0.08 of its potential returns per unit of risk. Asbury Automotive Group is currently generating about 0.03 per unit of risk. If you would invest 1,509 in Life Time Group on September 14, 2024 and sell it today you would earn a total of 785.00 from holding Life Time Group or generate 52.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Life Time Group vs. Asbury Automotive Group
Performance |
| Timeline |
| Life Time Group |
| Asbury Automotive |
Life Time and Asbury Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Life Time and Asbury Automotive
The main advantage of trading using opposite Life Time and Asbury Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Life Time 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.| Life Time vs. Bowlero Corp | Life Time vs. Planet Fitness | Life Time vs. JAKKS Pacific | Life Time vs. Xponential Fitness |
| 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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