Correlation Between Asbury Automotive and ScanSource

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

Diversification Opportunities for Asbury Automotive and ScanSource

0.73

Correlation Coefficient

Asbury Automotive  ScanSource

Poor diversification

The 3 months correlation between Asbury and ScanSource is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Asbury Automotive Group and ScanSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ScanSource 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 ScanSource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ScanSource has no effect on the direction of Asbury Automotive i.e., Asbury Automotive and ScanSource go up and down completely randomly.

Pair Corralation between Asbury Automotive and ScanSource

Considering the 90-day investment horizon Asbury Automotive Group is expected to under-perform the ScanSource. In addition to that, Asbury Automotive is 2.74 times more volatile than ScanSource. It trades about -0.07 of its total potential returns per unit of risk. ScanSource is currently generating about -0.12 per unit of volatility. If you would invest  4,181  in ScanSource on April 25, 2025 and sell it today you would lose (105.00) from holding ScanSource or give up 2.51% of portfolio value over 90 days.

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

Asbury Automotive Group  vs.  ScanSource

Asbury Automotive

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Asbury Automotive Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental drivers, Asbury Automotive is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

ScanSource

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ScanSource are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, ScanSource exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Asbury Automotive and ScanSource

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

The idea behind Asbury Automotive Group and ScanSource 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.