Correlation Between Winmark and Asbury Automotive
Can any of the company-specific risk be diversified away by investing in both Winmark 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 Winmark and Asbury Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Winmark and Asbury Automotive Group, you can compare the effects of market volatilities on Winmark 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 Winmark with a short position of Asbury Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Winmark and Asbury Automotive.
Diversification Opportunities for Winmark and Asbury Automotive
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Winmark and Asbury is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Winmark and Asbury Automotive Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asbury Automotive and Winmark 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 Winmark 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 Winmark i.e., Winmark and Asbury Automotive go up and down completely randomly.
Pair Corralation between Winmark and Asbury Automotive
Given the investment horizon of 90 days Winmark is expected to under-perform the Asbury Automotive. But the stock apears to be less risky and, when comparing its historical volatility, Winmark is 1.19 times less risky than Asbury Automotive. The stock trades about -0.14 of its potential returns per unit of risk. The Asbury Automotive Group is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 24,351 in Asbury Automotive Group on October 19, 2024 and sell it today you would earn a total of 127.00 from holding Asbury Automotive Group or generate 0.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Winmark vs. Asbury Automotive Group
Performance |
| Timeline |
| Winmark |
| Asbury Automotive |
Winmark and Asbury Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Winmark and Asbury Automotive
The main advantage of trading using opposite Winmark and Asbury Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Winmark 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.| Winmark vs. Mesa Laboratories | Winmark vs. Utah Medical Products | Winmark vs. Weyco Group | Winmark vs. Diamond Hill 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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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