Correlation Between Autozone and La Z

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

Diversification Opportunities for Autozone and La Z

0.74
  Correlation Coefficient

Poor diversification

The 3 months correlation between Autozone and La Z is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Autozone and La-Z-Boy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on La-Z-Boy 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 La Z. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of La-Z-Boy has no effect on the direction of Autozone i.e., Autozone and La Z go up and down completely randomly.

Pair Corralation between Autozone and La Z

Considering the 90-day investment horizon Autozone is expected to generate 0.73 times more return on investment than La Z. However, Autozone is 1.37 times less risky than La Z. It trades about -0.09 of its potential returns per unit of risk. La-Z-Boy is currently generating about -0.4 per unit of risk. If you would invest  216,736  in Autozone on June 29, 2022 and sell it today you would lose (6,786)  from holding Autozone or give up 3.13% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Autozone  vs.  La-Z-Boy

 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 latest stock price mess, may contribute to short-term losses for the institutional investors.

Autozone Price Channel

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

La Z Price Channel

Autozone and La Z Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Autozone and La Z

The main advantage of trading using opposite Autozone and La Z positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Autozone position performs unexpectedly, La Z 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 La Z will offset losses from the drop in La Z's long position.
Autozone vs. Clearwater Paper Corp
The idea behind Autozone and La-Z-Boy 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.
La Z vs. Clearwater Paper Corp
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.

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