Correlation Between Fast Retailing and Asbury Automotive
Can any of the company-specific risk be diversified away by investing in both Fast Retailing 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 Fast Retailing and Asbury Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fast Retailing Co and Asbury Automotive Group, you can compare the effects of market volatilities on Fast Retailing 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 Fast Retailing with a short position of Asbury Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fast Retailing and Asbury Automotive.
Diversification Opportunities for Fast Retailing and Asbury Automotive
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Fast and Asbury is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Fast Retailing Co and Asbury Automotive Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asbury Automotive and Fast Retailing 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 Fast Retailing Co 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 Fast Retailing i.e., Fast Retailing and Asbury Automotive go up and down completely randomly.
Pair Corralation between Fast Retailing and Asbury Automotive
Assuming the 90 days horizon Fast Retailing is expected to generate 1.19 times less return on investment than Asbury Automotive. In addition to that, Fast Retailing is 1.37 times more volatile than Asbury Automotive Group. It trades about 0.07 of its total potential returns per unit of risk. Asbury Automotive Group is currently generating about 0.12 per unit of volatility. If you would invest 22,205 in Asbury Automotive Group on September 17, 2024 and sell it today you would earn a total of 3,167 from holding Asbury Automotive Group or generate 14.26% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Fast Retailing Co vs. Asbury Automotive Group
Performance |
Timeline |
Fast Retailing |
Asbury Automotive |
Fast Retailing and Asbury Automotive Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Fast Retailing and Asbury Automotive
The main advantage of trading using opposite Fast Retailing and Asbury Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fast Retailing 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.Fast Retailing vs. Aritzia | Fast Retailing vs. Boot Barn Holdings | Fast Retailing vs. Guess Inc | Fast Retailing vs. The TJX Companies |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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