Correlation Between Evolution Mining and Asbury Automotive

Can any of the company-specific risk be diversified away by investing in both Evolution Mining 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 Evolution Mining and Asbury Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Evolution Mining and Asbury Automotive Group, you can compare the effects of market volatilities on Evolution Mining 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 Evolution Mining with a short position of Asbury Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evolution Mining and Asbury Automotive.

Diversification Opportunities for Evolution Mining and Asbury Automotive

0.05

Correlation Coefficient

Evolution Mining  Asbury Automotive

Significant diversification

The 3 months correlation between Evolution and Asbury is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Evolution Mining and Asbury Automotive Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asbury Automotive and Evolution Mining 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 Evolution Mining 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 Evolution Mining i.e., Evolution Mining and Asbury Automotive go up and down completely randomly.

Pair Corralation between Evolution Mining and Asbury Automotive

Assuming the 90 days horizon Evolution Mining is expected to generate 1.57 times less return on investment than Asbury Automotive. In addition to that, Evolution Mining is 1.71 times more volatile than Asbury Automotive Group. It trades about 0.03 of its total potential returns per unit of risk. Asbury Automotive Group is currently generating about 0.07 per unit of volatility. If you would invest  22,495  in Asbury Automotive Group on September 20, 2024 and sell it today you would earn a total of  1,891  from holding Asbury Automotive Group or generate 8.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Evolution Mining  vs.  Asbury Automotive Group

Evolution Mining

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Evolution Mining are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Evolution Mining is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Asbury Automotive

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Asbury Automotive Group are ranked lower than 5 (%) 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.

Pair Trading with Evolution Mining and Asbury Automotive

The main advantage of trading using opposite Evolution Mining and Asbury Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evolution Mining 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.

The idea behind Evolution Mining and Asbury Automotive Group 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.