Correlation Between United States and Asbury Automotive
Can any of the company-specific risk be diversified away by investing in both United States 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 United States and Asbury Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United States Steel and Asbury Automotive Group, you can compare the effects of market volatilities on United States 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 United States with a short position of Asbury Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and Asbury Automotive.
Diversification Opportunities for United States and Asbury Automotive
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between United and Asbury is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel and Asbury Automotive Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asbury Automotive and United States 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 United States Steel 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 United States i.e., United States and Asbury Automotive go up and down completely randomly.
Pair Corralation between United States and Asbury Automotive
Assuming the 90 days trading horizon United States Steel is expected to generate 2.79 times more return on investment than Asbury Automotive. However, United States is 2.79 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 -0.2 per unit of risk. If you would invest 3,296 in United States Steel on October 13, 2024 and sell it today you would lose (121.00) from holding United States Steel or give up 3.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
United States Steel vs. Asbury Automotive Group
Performance |
| Timeline |
| United States Steel |
| Asbury Automotive |
United States and Asbury Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United States and Asbury Automotive
The main advantage of trading using opposite United States and Asbury Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United States 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.| United States vs. CeoTronics AG | United States vs. THRACE PLASTICS | United States vs. NEWELL RUBBERMAID | United States vs. AGF Management Limited |
| Asbury Automotive vs. STEEL DYNAMICS | Asbury Automotive vs. ALGOMA STEEL GROUP | Asbury Automotive vs. United States Steel | Asbury Automotive vs. PT Steel Pipe |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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