Correlation Between Software Acquisition and Asbury Automotive
Can any of the company-specific risk be diversified away by investing in both Software Acquisition 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 Software Acquisition and Asbury Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Software Acquisition Group and Asbury Automotive Group, you can compare the effects of market volatilities on Software Acquisition 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 Software Acquisition with a short position of Asbury Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Software Acquisition and Asbury Automotive.
Diversification Opportunities for Software Acquisition and Asbury Automotive
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Software and Asbury is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Software Acquisition 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 Software Acquisition 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 Software Acquisition 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 Software Acquisition i.e., Software Acquisition and Asbury Automotive go up and down completely randomly.
Pair Corralation between Software Acquisition and Asbury Automotive
Assuming the 90 days horizon Software Acquisition Group is expected to generate 13.91 times more return on investment than Asbury Automotive. However, Software Acquisition is 13.91 times more volatile than Asbury Automotive Group. It trades about 0.13 of its potential returns per unit of risk. Asbury Automotive Group is currently generating about 0.12 per unit of risk. If you would invest 2.62 in Software Acquisition Group on November 2, 2024 and sell it today you would lose (0.39) from holding Software Acquisition Group or give up 14.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 72.82% |
| Values | Daily Returns |
Software Acquisition Group vs. Asbury Automotive Group
Performance |
| Timeline |
| Software Acquisition |
| Asbury Automotive |
Software Acquisition and Asbury Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Software Acquisition and Asbury Automotive
The main advantage of trading using opposite Software Acquisition and Asbury Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Software Acquisition 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.| Software Acquisition vs. Tyson Foods | Software Acquisition vs. Paranovus Entertainment Technology | Software Acquisition vs. Tesla Inc | Software Acquisition vs. Keurig Dr Pepper |
| 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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