Correlation Between Applied Materials and Autozone

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

Diversification Opportunities for Applied Materials and Autozone

0.09
  Correlation Coefficient

Significant diversification

The 3 months correlation between Applied and Autozone is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Applied Materials and Autozone in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autozone and Applied Materials 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 Applied Materials 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 Applied Materials i.e., Applied Materials and Autozone go up and down completely randomly.

Pair Corralation between Applied Materials and Autozone

Given the investment horizon of 90 days Applied Materials is expected to under-perform the Autozone. In addition to that, Applied Materials is 2.58 times more volatile than Autozone. It trades about -0.22 of its total potential returns per unit of risk. Autozone is currently generating about 0.24 per unit of volatility. If you would invest  202,896  in Autozone on March 27, 2022 and sell it today you would earn a total of  12,995  from holding Autozone or generate 6.4% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Applied Materials  vs.  Autozone

 Performance (%) 
      Timeline 
Applied Materials 
Applied Performance
0 of 100
Over the last 90 days Applied Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in July 2022. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Applied Price Channel

Autozone 
Autozone Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Autozone are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Autozone may actually be approaching a critical reversion point that can send shares even higher in July 2022.

Structure and Payout Changes

Last Split Factor
2:1
Last Split Date
1994-04-21

Autozone Price Channel

Applied Materials and Autozone Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Applied Materials and Autozone

The main advantage of trading using opposite Applied Materials and Autozone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Materials 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.
The idea behind Applied Materials 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.

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