Correlation Between Advance Auto and Autozone

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Advance Auto and Autozone 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 Advance Auto and Autozone into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advance Auto Parts and Autozone, you can compare the effects of market volatilities on Advance Auto and Autozone 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 Advance Auto with a short position of Autozone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advance Auto and Autozone.

Diversification Opportunities for Advance Auto and Autozone

0.79
  Correlation Coefficient

Poor diversification

The 3 months correlation between Advance and Autozone is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Advance Auto Parts and Autozone in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Autozone and Advance Auto 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 Advance Auto Parts are associated (or correlated) with Autozone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Autozone has no effect on the direction of Advance Auto i.e., Advance Auto and Autozone go up and down completely randomly.

Pair Corralation between Advance Auto and Autozone

Considering the 90-day investment horizon Advance Auto is expected to generate 1.21 times less return on investment than Autozone. In addition to that, Advance Auto is 1.11 times more volatile than Autozone. It trades about 0.05 of its total potential returns per unit of risk. Autozone is currently generating about 0.07 per unit of volatility. If you would invest  114,786  in Autozone on February 18, 2022 and sell it today you would earn a total of  69,176  from holding Autozone or generate 60.27% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Advance Auto Parts  vs.  Autozone

 Performance (%) 
      Timeline 
Advance Auto Parts 
Advance Performance
0 of 100
Over the last 90 days Advance Auto Parts has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm insiders.

Advance Price Channel

Autozone 
Autozone Performance
0 of 100
Over the last 90 days Autozone has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Autozone is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Autozone Price Channel

Advance Auto and Autozone Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Advance Auto and Autozone

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

Advance Auto Parts

Pair trading matchups for Advance Auto

The idea behind Advance Auto Parts and Autozone 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.

Autozone

Pair trading matchups for Autozone

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 Bond Directory module to find actively traded corporate debentures issued by US companies.

Other Complementary Tools

ETF Directory
Find actively traded Exchange Traded Funds (ETF) from around the world
Go
Competition Analyzer
Analyze and compare many basic indicators for a group of related or unrelated entities
Go
Theme Ratings
Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance
Go
Equity Valuation
Check real value of public entities based on technical and fundamental data
Go
Bollinger Bands
Use Bollinger Bands indicator to analyze target price for a given investing horizon
Go
Balance Of Power
Check stock momentum by analyzing Balance Of Power indicator and other technical ratios
Go
Idea Analyzer
Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas
Go
Equity Analysis
Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities
Go
Portfolio Comparator
Compare the composition, asset allocations and performance of any two portfolios in your account
Go
Risk-Return Analysis
View associations between returns expected from investment and the risk you assume
Go