Correlation Between Chargepoint Hldgs and Advance Auto

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

Diversification Opportunities for Chargepoint Hldgs and Advance Auto

-0.25
  Correlation Coefficient

Very good diversification

The 3 months correlation between Chargepoint and Advance is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Chargepoint Hldgs 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 Chargepoint Hldgs 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 Chargepoint Hldgs 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 Chargepoint Hldgs i.e., Chargepoint Hldgs and Advance Auto go up and down completely randomly.

Pair Corralation between Chargepoint Hldgs and Advance Auto

Given the investment horizon of 90 days Chargepoint Hldgs is expected to generate 3.52 times more return on investment than Advance Auto. However, Chargepoint Hldgs is 3.52 times more volatile than Advance Auto Parts. It trades about 0.28 of its potential returns per unit of risk. Advance Auto Parts is currently generating about 0.21 per unit of risk. If you would invest  1,194  in Chargepoint Hldgs on May 11, 2022 and sell it today you would earn a total of  406.00  from holding Chargepoint Hldgs or generate 34.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Chargepoint Hldgs  vs.  Advance Auto Parts

 Performance (%) 
       Timeline  
Chargepoint Hldgs 
Chargepoint Performance
13 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Chargepoint Hldgs are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Chargepoint Hldgs unveiled solid returns over the last few months and may actually be approaching a breakup point.

Chargepoint 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 very healthy basic indicators, Advance Auto is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the insiders.

Advance Price Channel

Chargepoint Hldgs and Advance Auto Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Chargepoint Hldgs and Advance Auto

The main advantage of trading using opposite Chargepoint Hldgs and Advance Auto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chargepoint Hldgs 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.
The idea behind Chargepoint Hldgs 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 Watchlist Optimization module to optimize watchlists to build efficient portfolio or rebalance existing positions based on mean-variance optimization algorithm.

Other Complementary Tools

Analyst Recommendations
Analyst recommendations and target price estimates broken down by several categories
Go
Risk-Return Analysis
View associations between returns expected from investment and the risk you assume
Go
Performance Analysis
Check effects of mean-variance optimization against your current asset allocation
Go
Portfolio Manager
State of the art Portfolio Manager to monitor and improve performance of your invested capital
Go
Fundamental Analysis
View fundamental data based on most recent published financial statements
Go