Correlation Between Reservoir Media and Asbury Automotive
Can any of the company-specific risk be diversified away by investing in both Reservoir Media 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 Reservoir Media and Asbury Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Reservoir Media and Asbury Automotive Group, you can compare the effects of market volatilities on Reservoir Media 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 Reservoir Media with a short position of Asbury Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reservoir Media and Asbury Automotive.
Diversification Opportunities for Reservoir Media and Asbury Automotive
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Reservoir and Asbury is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Reservoir Media and Asbury Automotive Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asbury Automotive and Reservoir Media 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 Reservoir Media 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 Reservoir Media i.e., Reservoir Media and Asbury Automotive go up and down completely randomly.
Pair Corralation between Reservoir Media and Asbury Automotive
Given the investment horizon of 90 days Reservoir Media is expected to generate 1.01 times more return on investment than Asbury Automotive. However, Reservoir Media is 1.01 times more volatile than Asbury Automotive Group. It trades about 0.04 of its potential returns per unit of risk. Asbury Automotive Group is currently generating about 0.01 per unit of risk. If you would invest 813.00 in Reservoir Media on September 21, 2024 and sell it today you would earn a total of 68.00 from holding Reservoir Media or generate 8.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Reservoir Media vs. Asbury Automotive Group
Performance |
| Timeline |
| Reservoir Media |
| Asbury Automotive |
Reservoir Media and Asbury Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Reservoir Media and Asbury Automotive
The main advantage of trading using opposite Reservoir Media and Asbury Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reservoir Media 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.| Reservoir Media vs. Reading International | Reservoir Media vs. Marcus | Reservoir Media vs. Gaia Inc | Reservoir Media vs. News Corp B |
| 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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