Correlation Between Autozone and American Express

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

Diversification Opportunities for Autozone and American Express

0.59
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Autozone and American is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Autozone and American Express in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Express and Autozone 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 Autozone are associated (or correlated) with American Express. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Express has no effect on the direction of Autozone i.e., Autozone and American Express go up and down completely randomly.

Pair Corralation between Autozone and American Express

Considering the 90-day investment horizon Autozone is expected to generate 0.75 times more return on investment than American Express. However, Autozone is 1.33 times less risky than American Express. It trades about 0.08 of its potential returns per unit of risk. American Express is currently generating about 0.04 per unit of risk. If you would invest  114,406  in Autozone on July 2, 2022 and sell it today you would earn a total of  100,670  from holding Autozone or generate 87.99% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Autozone  vs.  American Express

 Performance (%) 
       Timeline  
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 current stock price mess, may contribute to short-term losses for the institutional investors.

Autozone Price Channel

American Express 
American Performance
0 of 100
Over the last 90 days American Express has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, American Express is not utilizing all of its potentials. The new stock price disarray, may contribute to short-term losses for the insiders.

American Price Channel

Autozone and American Express Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Autozone and American Express

The main advantage of trading using opposite Autozone and American Express positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Autozone position performs unexpectedly, American Express 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 American Express will offset losses from the drop in American Express' long position.
Autozone vs. Best Buy Company
The idea behind Autozone and American Express 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.
American Express vs. Paypal Holdings
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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