Correlation Between Funko and Asbury Automotive

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

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

Diversification Opportunities for Funko and Asbury Automotive

-0.28

Correlation Coefficient

Funko  Asbury Automotive

Very good diversification

The 3 months correlation between Funko and Asbury is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Funko Inc and Asbury Automotive Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asbury Automotive and Funko 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 Funko Inc 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 Funko i.e., Funko and Asbury Automotive go up and down completely randomly.

Pair Corralation between Funko and Asbury Automotive

Given the investment horizon of 90 days Funko Inc is expected to generate 1.44 times more return on investment than Asbury Automotive. However, Funko is 1.44 times more volatile than Asbury Automotive Group. It trades about 0.08 of its potential returns per unit of risk. Asbury Automotive Group is currently generating about 0.08 per unit of risk. If you would invest  1,033  in Funko Inc on September 1, 2024 and sell it today you would earn a total of  142.00  from holding Funko Inc or generate 13.75% return on investment over 90 days.

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

Funko Inc  vs.  Asbury Automotive Group

Funko Inc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Funko Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain forward-looking signals, Funko displayed solid returns over the last few months and may actually be approaching a breakup point.

Asbury Automotive

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Asbury Automotive Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental drivers, Asbury Automotive may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Funko and Asbury Automotive

The main advantage of trading using opposite Funko and Asbury Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Funko 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 Funko Inc 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.