Correlation Between Asbury Automotive and Grocery Outlet
Can any of the company-specific risk be diversified away by investing in both Asbury Automotive and Grocery Outlet 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 Asbury Automotive and Grocery Outlet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Asbury Automotive Group and Grocery Outlet Holding, you can compare the effects of market volatilities on Asbury Automotive and Grocery Outlet 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 Asbury Automotive with a short position of Grocery Outlet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asbury Automotive and Grocery Outlet.
Diversification Opportunities for Asbury Automotive and Grocery Outlet
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Asbury and Grocery is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Asbury Automotive Group and Grocery Outlet Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grocery Outlet Holding and Asbury Automotive 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 Asbury Automotive Group are associated (or correlated) with Grocery Outlet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grocery Outlet Holding has no effect on the direction of Asbury Automotive i.e., Asbury Automotive and Grocery Outlet go up and down completely randomly.
Pair Corralation between Asbury Automotive and Grocery Outlet
Considering the 90-day investment horizon Asbury Automotive Group is expected to under-perform the Grocery Outlet. In addition to that, Asbury Automotive is 1.26 times more volatile than Grocery Outlet Holding. It trades about -0.11 of its total potential returns per unit of risk. Grocery Outlet Holding is currently generating about -0.12 per unit of volatility. If you would invest 2,682 in Grocery Outlet Holding on February 5, 2024 and sell it today you would lose (111.00) from holding Grocery Outlet Holding or give up 4.14% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Asbury Automotive Group vs. Grocery Outlet Holding
Performance |
Timeline |
Asbury Automotive |
Grocery Outlet Holding |
Asbury Automotive and Grocery Outlet Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Asbury Automotive and Grocery Outlet
The main advantage of trading using opposite Asbury Automotive and Grocery Outlet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asbury Automotive position performs unexpectedly, Grocery Outlet 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 Grocery Outlet will offset losses from the drop in Grocery Outlet's long position.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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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