Correlation Between Asbury Automotive and Expedia
Can any of the company-specific risk be diversified away by investing in both Asbury Automotive and Expedia 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 Expedia 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 Expedia Group, you can compare the effects of market volatilities on Asbury Automotive and Expedia 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 Expedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asbury Automotive and Expedia.
Diversification Opportunities for Asbury Automotive and Expedia
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Asbury and Expedia is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Asbury Automotive Group and Expedia Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Expedia Group 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 Expedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Expedia Group has no effect on the direction of Asbury Automotive i.e., Asbury Automotive and Expedia go up and down completely randomly.
Pair Corralation between Asbury Automotive and Expedia
Considering the 90-day investment horizon Asbury Automotive Group is expected to generate 0.93 times more return on investment than Expedia. However, Asbury Automotive Group is 1.08 times less risky than Expedia. It trades about 0.02 of its potential returns per unit of risk. Expedia Group is currently generating about 0.02 per unit of risk. If you would invest 19,163 in Asbury Automotive Group on January 26, 2024 and sell it today you would earn a total of 2,991 from holding Asbury Automotive Group or generate 15.61% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Asbury Automotive Group vs. Expedia Group
Performance |
Timeline |
Asbury Automotive |
Expedia Group |
Asbury Automotive and Expedia Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Asbury Automotive and Expedia
The main advantage of trading using opposite Asbury Automotive and Expedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asbury Automotive position performs unexpectedly, Expedia 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 Expedia will offset losses from the drop in Expedia's long position.Asbury Automotive vs. Motorcar Parts of | Asbury Automotive vs. Standard Motor Products | Asbury Automotive vs. Stoneridge | Asbury Automotive vs. Douglas Dynamics |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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