Correlation Between AMP and Advance Auto

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

Diversification Opportunities for AMP and Advance Auto

-0.51
  Correlation Coefficient

Excellent diversification

The 3 months correlation between AMP and Advance is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding AMP LIMITED 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 AMP 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 AMP LIMITED 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 AMP i.e., AMP and Advance Auto go up and down completely randomly.

Pair Corralation between AMP and Advance Auto

Assuming the 90 days horizon AMP LIMITED is expected to generate 0.98 times more return on investment than Advance Auto. However, AMP LIMITED is 1.02 times less risky than Advance Auto. It trades about 0.06 of its potential returns per unit of risk. Advance Auto Parts is currently generating about -0.09 per unit of risk. If you would invest  261.00  in AMP LIMITED on April 2, 2022 and sell it today you would earn a total of  34.00  from holding AMP LIMITED or generate 13.03% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy99.2%
ValuesDaily Returns

AMP LIMITED  vs.  Advance Auto Parts

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

AMP Price Channel

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 conflicting performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in August 2022. The recent disarray may also be a sign of long period up-swing for the firm insiders.

Structure and Payout Changes

Forward Annual Dividend Yield
0.0347
Payout Ratio
0.41
Last Split Factor
3:2
Forward Annual Dividend Rate
6.0
Dividend Date
2022-07-01
Ex Dividend Date
2022-06-16
Last Split Date
2005-09-26

Advance Price Channel

AMP and Advance Auto Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with AMP and Advance Auto

The main advantage of trading using opposite AMP and Advance Auto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMP 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.

AMP LIMITED

Pair trading matchups for AMP

Vmware vs. AMP
Alphabet vs. AMP
Novan vs. AMP
Visa vs. AMP
BP PLC vs. AMP
Alzamend Neuro vs. AMP
MITIE GROUP vs. AMP
Arca Biopharma vs. AMP
Sentinelone Inc vs. AMP
International Business vs. AMP
ATT vs. AMP
Seneca Foods vs. AMP
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against AMP as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. AMP's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, AMP's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to AMP LIMITED.
The idea behind AMP LIMITED 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.
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.

Other Complementary Tools

Portfolio Center
All portfolio management and optimization tools to improve performance of your portfolios
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
Fundamentals Comparison
Compare fundamentals across multiple equities to find investing opportunities
Go
Idea Analyzer
Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas
Go
Aroon Oscillator
Analyze current equity momentum using Aroon Oscillator and other momentum ratios
Go
Portfolio Volatility
Check portfolio volatility and analyze historical return density to properly model market risk
Go
Positions Ratings
Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance
Go