Correlation Between AID AUTO and Advance Auto

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

Diversification Opportunities for AID AUTO and Advance Auto

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between AIDA1 and Advance is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding AID AUTO STORES and Advance Auto Parts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advance Auto Parts and AID 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 AID AUTO STORES are associated (or correlated) with Advance Auto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advance Auto Parts has no effect on the direction of AID AUTO i.e., AID AUTO and Advance Auto go up and down completely randomly.

Pair Corralation between AID AUTO and Advance Auto

If you would invest (100.00)  in AID AUTO STORES on February 21, 2022 and sell it today you would earn a total of  100.00  from holding AID AUTO STORES or generate -100.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

AID AUTO STORES  vs.  Advance Auto Parts

 Performance (%) 
      Timeline 
AID AUTO STORES 
AIDA1 Performance
0 of 100
Over the last 90 days AID AUTO STORES has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, AID AUTO is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.
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 weak 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

AID AUTO and Advance Auto Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with AID AUTO and Advance Auto

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

Advance Auto Parts

Pair trading matchups for Advance Auto

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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.

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