Correlation Between AutoNation and Group 1
Can any of the company-specific risk be diversified away by investing in both AutoNation and Group 1 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 AutoNation and Group 1 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AutoNation and Group 1 Automotive, you can compare the effects of market volatilities on AutoNation and Group 1 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 AutoNation with a short position of Group 1. Check out your portfolio center. Please also check ongoing floating volatility patterns of AutoNation and Group 1.
Diversification Opportunities for AutoNation and Group 1
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between AutoNation and Group is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding AutoNation and Group 1 Automotive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Group 1 Automotive and AutoNation 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 AutoNation are associated (or correlated) with Group 1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Group 1 Automotive has no effect on the direction of AutoNation i.e., AutoNation and Group 1 go up and down completely randomly.
Pair Corralation between AutoNation and Group 1
Allowing for the 90-day total investment horizon AutoNation is expected to generate 0.92 times more return on investment than Group 1. However, AutoNation is 1.09 times less risky than Group 1. It trades about 0.0 of its potential returns per unit of risk. Group 1 Automotive is currently generating about -0.14 per unit of risk. If you would invest 19,011 in AutoNation on March 17, 2025 and sell it today you would lose (49.00) from holding AutoNation or give up 0.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
AutoNation vs. Group 1 Automotive
Performance |
| Timeline |
| AutoNation |
| Group 1 Automotive |
AutoNation and Group 1 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AutoNation and Group 1
The main advantage of trading using opposite AutoNation and Group 1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AutoNation position performs unexpectedly, Group 1 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 Group 1 will offset losses from the drop in Group 1's long position.| AutoNation vs. Sonic Automotive | AutoNation vs. Lithia Motors | AutoNation vs. Asbury Automotive Group | AutoNation vs. Penske Automotive Group |
| Group 1 vs. Penske Automotive Group | Group 1 vs. Lithia Motors | Group 1 vs. AutoNation | Group 1 vs. Asbury Automotive Group |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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