Correlation Between Penske Automotive and Asbury Automotive
Can any of the company-specific risk be diversified away by investing in both Penske Automotive 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 Penske Automotive and Asbury Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Penske Automotive Group and Asbury Automotive Group, you can compare the effects of market volatilities on Penske Automotive 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 Penske Automotive with a short position of Asbury Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penske Automotive and Asbury Automotive.
Diversification Opportunities for Penske Automotive and Asbury Automotive
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Penske and Asbury is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Penske Automotive 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 Penske Automotive 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 Penske Automotive 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 Penske Automotive i.e., Penske Automotive and Asbury Automotive go up and down completely randomly.
Pair Corralation between Penske Automotive and Asbury Automotive
Assuming the 90 days horizon Penske Automotive is expected to generate 1.18 times less return on investment than Asbury Automotive. But when comparing it to its historical volatility, Penske Automotive Group is 1.25 times less risky than Asbury Automotive. It trades about 0.03 of its potential returns per unit of risk. Asbury Automotive Group is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 21,000 in Asbury Automotive Group on August 31, 2024 and sell it today you would earn a total of 3,600 from holding Asbury Automotive Group or generate 17.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Penske Automotive Group vs. Asbury Automotive Group
Performance |
| Timeline |
| Penske Automotive |
| Asbury Automotive |
Penske Automotive and Asbury Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Penske Automotive and Asbury Automotive
The main advantage of trading using opposite Penske Automotive and Asbury Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Penske Automotive 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.| Penske Automotive vs. USS Co | Penske Automotive vs. Superior Plus Corp | Penske Automotive vs. NMI Holdings | Penske Automotive vs. Origin Agritech |
| Asbury Automotive vs. CompuGroup Medical SE | Asbury Automotive vs. BANKINTER ADR 2007 | Asbury Automotive vs. QBE Insurance Group | Asbury Automotive vs. Avanos Medical |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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