Correlation Between Asbury Automotive and John Wiley

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

Diversification Opportunities for Asbury Automotive and John Wiley

0.29

Correlation Coefficient

Asbury Automotive  John Wiley

Modest diversification

The 3 months correlation between Asbury and John is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Asbury Automotive Group and John Wiley Sons in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Wiley Sons 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 John Wiley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of John Wiley Sons has no effect on the direction of Asbury Automotive i.e., Asbury Automotive and John Wiley go up and down completely randomly.

Pair Corralation between Asbury Automotive and John Wiley

Considering the 90-day investment horizon Asbury Automotive is expected to generate 75.92 times less return on investment than John Wiley. But when comparing it to its historical volatility, Asbury Automotive Group is 37.53 times less risky than John Wiley. It trades about 0.04 of its potential returns per unit of risk. John Wiley Sons is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  3,846  in John Wiley Sons on September 25, 2024 and sell it today you would earn a total of  568.00  from holding John Wiley Sons or generate 14.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	80.04%
Values	Daily Returns

Asbury Automotive Group  vs.  John Wiley Sons

Asbury Automotive

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Asbury Automotive Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent fundamental drivers, Asbury Automotive may actually be approaching a critical reversion point that can send shares even higher in January 2025.

John Wiley Sons

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Asbury Automotive and John Wiley

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

The idea behind Asbury Automotive Group and John Wiley Sons 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.