Correlation Between ATRenew and Asbury Automotive
Can any of the company-specific risk be diversified away by investing in both ATRenew 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 ATRenew and Asbury Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ATRenew Inc DRC and Asbury Automotive Group, you can compare the effects of market volatilities on ATRenew 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 ATRenew with a short position of Asbury Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATRenew and Asbury Automotive.
Diversification Opportunities for ATRenew and Asbury Automotive
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between ATRenew and Asbury is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding ATRenew Inc DRC and Asbury Automotive Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asbury Automotive and ATRenew 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 ATRenew Inc DRC 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 ATRenew i.e., ATRenew and Asbury Automotive go up and down completely randomly.
Pair Corralation between ATRenew and Asbury Automotive
Given the investment horizon of 90 days ATRenew Inc DRC is expected to generate 1.94 times more return on investment than Asbury Automotive. However, ATRenew is 1.94 times more volatile than Asbury Automotive Group. It trades about 0.02 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 305.00 in ATRenew Inc DRC on November 2, 2024 and sell it today you would lose (35.50) from holding ATRenew Inc DRC or give up 11.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
ATRenew Inc DRC vs. Asbury Automotive Group
Performance |
| Timeline |
| ATRenew Inc DRC |
| Asbury Automotive |
ATRenew and Asbury Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ATRenew and Asbury Automotive
The main advantage of trading using opposite ATRenew and Asbury Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATRenew 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.The idea behind ATRenew Inc DRC and Asbury Automotive Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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