Correlation Between Kirklands and Autozone

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

Diversification Opportunities for Kirklands and Autozone

0.6
  Correlation Coefficient

Poor diversification

The 3 months correlation between Kirklands and Autozone is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Kirklands and Autozone in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autozone and Kirklands 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 Kirklands 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 Kirklands i.e., Kirklands and Autozone go up and down completely randomly.

Pair Corralation between Kirklands and Autozone

Given the investment horizon of 90 days Kirklands is expected to under-perform the Autozone. In addition to that, Kirklands is 3.05 times more volatile than Autozone. It trades about -0.09 of its total potential returns per unit of risk. Autozone is currently generating about 0.05 per unit of volatility. If you would invest  169,799  in Autozone on June 27, 2022 and sell it today you would earn a total of  39,885  from holding Autozone or generate 23.49% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy99.6%
ValuesDaily Returns

Kirklands  vs.  Autozone

 Performance (%) 
       Timeline  
Kirklands 
Kirklands Performance
0 of 100
Over the last 90 days Kirklands has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Kirklands is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

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

Autozone Price Channel

Kirklands and Autozone Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Kirklands and Autozone

The main advantage of trading using opposite Kirklands and Autozone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kirklands 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.
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The idea behind Kirklands 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.

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