Correlation Between Revolve Group and Asbury Automotive
Can any of the company-specific risk be diversified away by investing in both Revolve Group 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 Revolve Group and Asbury Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Revolve Group LLC and Asbury Automotive Group, you can compare the effects of market volatilities on Revolve Group 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 Revolve Group with a short position of Asbury Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Revolve Group and Asbury Automotive.
Diversification Opportunities for Revolve Group and Asbury Automotive
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Revolve and Asbury is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Revolve Group LLC and Asbury Automotive Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asbury Automotive and Revolve Group 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 Revolve Group LLC 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 Revolve Group i.e., Revolve Group and Asbury Automotive go up and down completely randomly.
Pair Corralation between Revolve Group and Asbury Automotive
Given the investment horizon of 90 days Revolve Group LLC is expected to generate 1.98 times more return on investment than Asbury Automotive. However, Revolve Group is 1.98 times more volatile than Asbury Automotive Group. It trades about 0.09 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 1,861 in Revolve Group LLC on September 14, 2024 and sell it today you would earn a total of 1,856 from holding Revolve Group LLC or generate 99.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Revolve Group LLC vs. Asbury Automotive Group
Performance |
| Timeline |
| Revolve Group LLC |
| Asbury Automotive |
Revolve Group and Asbury Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Revolve Group and Asbury Automotive
The main advantage of trading using opposite Revolve Group and Asbury Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Revolve Group 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.| Revolve Group vs. Capri Holdings | Revolve Group vs. Movado Group | Revolve Group vs. Tapestry | Revolve Group 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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