Correlation Between Big Lots and Autozone

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

Diversification Opportunities for Big Lots and Autozone

0.82
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Big Lots and Autozone is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Big Lots and Autozone in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autozone and Big Lots 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 Big Lots 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 Big Lots i.e., Big Lots and Autozone go up and down completely randomly.

Pair Corralation between Big Lots and Autozone

Considering the 90-day investment horizon Big Lots is expected to under-perform the Autozone. In addition to that, Big Lots is 2.28 times more volatile than Autozone. It trades about -0.03 of its total potential returns per unit of risk. Autozone is currently generating about 0.08 per unit of volatility. If you would invest  117,827  in Autozone on June 26, 2022 and sell it today you would earn a total of  91,857  from holding Autozone or generate 77.96% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Big Lots  vs.  Autozone

 Performance (%) 
       Timeline  
Big Lots 
Big Lots Performance
0 of 100
Over the last 90 days Big Lots has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's forward indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Big Lots Price Channel

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

Big Lots and Autozone Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Big Lots and Autozone

The main advantage of trading using opposite Big Lots and Autozone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Big Lots 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.
Big Lots vs. BUSHVELD MINERALS LTD
The idea behind Big Lots 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.
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.

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