Correlation Between Visa and Asbury Automotive
Can any of the company-specific risk be diversified away by investing in both Visa 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 Visa and Asbury Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Visa Class A and Asbury Automotive Group, you can compare the effects of market volatilities on Visa 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 Visa with a short position of Asbury Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Asbury Automotive.
Diversification Opportunities for Visa and Asbury Automotive
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Visa and Asbury is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Asbury Automotive Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asbury Automotive and Visa 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 Visa Class A 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 Visa i.e., Visa and Asbury Automotive go up and down completely randomly.
Pair Corralation between Visa and Asbury Automotive
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.54 times more return on investment than Asbury Automotive. However, Visa Class A is 1.84 times less risky than Asbury Automotive. It trades about 0.13 of its potential returns per unit of risk. Asbury Automotive Group is currently generating about -0.04 per unit of risk. If you would invest 31,216 in Visa Class A on September 18, 2024 and sell it today you would earn a total of 614.00 from holding Visa Class A or generate 1.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Asbury Automotive Group
Performance |
| Timeline |
| Visa Class A |
| Asbury Automotive |
Visa and Asbury Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Asbury Automotive
The main advantage of trading using opposite Visa and Asbury Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa 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.The idea behind Visa Class A and Asbury Automotive Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
Other Complementary Tools
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities |