Correlation Between Xtant Medical and Asbury Automotive

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

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

Diversification Opportunities for Xtant Medical and Asbury Automotive

-0.73

Correlation Coefficient

Xtant Medical  Asbury Automotive

Pay attention - limited upside

The 3 months correlation between Xtant and Asbury is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Xtant Medical Holdings and Asbury Automotive Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asbury Automotive and Xtant Medical 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 Xtant Medical Holdings 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 Xtant Medical i.e., Xtant Medical and Asbury Automotive go up and down completely randomly.

Pair Corralation between Xtant Medical and Asbury Automotive

Given the investment horizon of 90 days Xtant Medical Holdings is expected to generate 2.68 times more return on investment than Asbury Automotive. However, Xtant Medical is 2.68 times more volatile than Asbury Automotive Group. It trades about 0.03 of its potential returns per unit of risk. Asbury Automotive Group is currently generating about -0.36 per unit of risk. If you would invest  40.00  in Xtant Medical Holdings on September 24, 2024 and sell it today you would earn a total of  0.30  from holding Xtant Medical Holdings or generate 0.75% return on investment over 90 days.

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

Xtant Medical Holdings  vs.  Asbury Automotive Group

Xtant Medical Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xtant Medical Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

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 unfluctuating fundamental drivers, Asbury Automotive may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Xtant Medical and Asbury Automotive

The main advantage of trading using opposite Xtant Medical and Asbury Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtant Medical 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 Xtant Medical Holdings 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.