Correlation Between Valvoline and Asbury Automotive
Can any of the company-specific risk be diversified away by investing in both Valvoline 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 Valvoline and Asbury Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Valvoline and Asbury Automotive Group, you can compare the effects of market volatilities on Valvoline 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 Valvoline with a short position of Asbury Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valvoline and Asbury Automotive.
Diversification Opportunities for Valvoline and Asbury Automotive
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Valvoline and Asbury is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Valvoline and Asbury Automotive Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asbury Automotive and Valvoline 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 Valvoline 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 Valvoline i.e., Valvoline and Asbury Automotive go up and down completely randomly.
Pair Corralation between Valvoline and Asbury Automotive
Considering the 90-day investment horizon Valvoline is expected to under-perform the Asbury Automotive. In addition to that, Valvoline is 1.09 times more volatile than Asbury Automotive Group. It trades about -0.02 of its total potential returns per unit of risk. Asbury Automotive Group is currently generating about 0.28 per unit of volatility. If you would invest 22,798 in Asbury Automotive Group on September 2, 2024 and sell it today you would earn a total of 3,185 from holding Asbury Automotive Group or generate 13.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Valvoline vs. Asbury Automotive Group
Performance |
| Timeline |
| Valvoline |
| Asbury Automotive |
Valvoline and Asbury Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Valvoline and Asbury Automotive
The main advantage of trading using opposite Valvoline and Asbury Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valvoline 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.| Valvoline vs. Cosan SA ADR | Valvoline vs. Delek Energy | Valvoline vs. Crossamerica Partners LP | Valvoline vs. Par Pacific Holdings |
| Asbury Automotive vs. Advance Auto Parts | Asbury Automotive vs. Tractor Supply | Asbury Automotive vs. Genuine Parts Co | Asbury Automotive vs. Five Below |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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