Correlation Between Willamette Valley and Asbury Automotive
Can any of the company-specific risk be diversified away by investing in both Willamette Valley 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 Willamette Valley and Asbury Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Willamette Valley Vineyards and Asbury Automotive Group, you can compare the effects of market volatilities on Willamette Valley 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 Willamette Valley with a short position of Asbury Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Willamette Valley and Asbury Automotive.
Diversification Opportunities for Willamette Valley and Asbury Automotive
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Willamette and Asbury is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Willamette Valley Vineyards and Asbury Automotive Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asbury Automotive and Willamette Valley 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 Willamette Valley Vineyards 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 Willamette Valley i.e., Willamette Valley and Asbury Automotive go up and down completely randomly.
Pair Corralation between Willamette Valley and Asbury Automotive
Given the investment horizon of 90 days Willamette Valley Vineyards is expected to under-perform the Asbury Automotive. In addition to that, Willamette Valley is 1.02 times more volatile than Asbury Automotive Group. It trades about -0.07 of its total potential returns per unit of risk. Asbury Automotive Group is currently generating about 0.05 per unit of volatility. If you would invest 21,521 in Asbury Automotive Group on September 3, 2024 and sell it today you would earn a total of 4,462 from holding Asbury Automotive Group or generate 20.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Willamette Valley Vineyards vs. Asbury Automotive Group
Performance |
| Timeline |
| Willamette Valley |
| Asbury Automotive |
Willamette Valley and Asbury Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Willamette Valley and Asbury Automotive
The main advantage of trading using opposite Willamette Valley and Asbury Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Willamette Valley 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.| Willamette Valley vs. Naked Wines plc | Willamette Valley vs. Andrew Peller Limited | Willamette Valley vs. Iconic Brands | Willamette Valley vs. Naked Wines plc |
| 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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