Correlation Between Asbury Automotive and SHERWIN

Can any of the company-specific risk be diversified away by investing in both Asbury Automotive and SHERWIN 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 SHERWIN 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 SHERWIN WILLIAMS 345 percent, you can compare the effects of market volatilities on Asbury Automotive and SHERWIN 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 SHERWIN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asbury Automotive and SHERWIN.

Diversification Opportunities for Asbury Automotive and SHERWIN

-0.34

Correlation Coefficient

Asbury Automotive  SHERWIN

Very good diversification

The 3 months correlation between Asbury and SHERWIN is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Asbury Automotive Group and SHERWIN WILLIAMS 345 percent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SHERWIN WILLIAMS 345 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 SHERWIN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SHERWIN WILLIAMS 345 has no effect on the direction of Asbury Automotive i.e., Asbury Automotive and SHERWIN go up and down completely randomly.

Pair Corralation between Asbury Automotive and SHERWIN

Considering the 90-day investment horizon Asbury Automotive Group is expected to under-perform the SHERWIN. In addition to that, Asbury Automotive is 3.08 times more volatile than SHERWIN WILLIAMS 345 percent. It trades about -0.1 of its total potential returns per unit of risk. SHERWIN WILLIAMS 345 percent is currently generating about -0.18 per unit of volatility. If you would invest  9,897  in SHERWIN WILLIAMS 345 percent on September 15, 2024 and sell it today you would lose (160.00) from holding SHERWIN WILLIAMS 345 percent or give up 1.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Asbury Automotive Group  vs.  SHERWIN WILLIAMS 345 percent

Asbury Automotive

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Asbury Automotive Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating fundamental drivers, Asbury Automotive reported solid returns over the last few months and may actually be approaching a breakup point.

SHERWIN WILLIAMS 345

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SHERWIN WILLIAMS 345 percent has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, SHERWIN is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Asbury Automotive and SHERWIN

The main advantage of trading using opposite Asbury Automotive and SHERWIN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asbury Automotive position performs unexpectedly, SHERWIN 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 SHERWIN will offset losses from the drop in SHERWIN's long position.

The idea behind Asbury Automotive Group and SHERWIN WILLIAMS 345 percent pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.