Correlation Between Walmart and Autozone

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

Diversification Opportunities for Walmart and Autozone

0.02
  Correlation Coefficient

Significant diversification

The 3 months correlation between Walmart and Autozone is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Autozone in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autozone and Walmart 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 Walmart 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 Walmart i.e., Walmart and Autozone go up and down completely randomly.

Pair Corralation between Walmart and Autozone

Considering the 90-day investment horizon Walmart is expected to generate 1.93 times more return on investment than Autozone. However, Walmart is 1.93 times more volatile than Autozone. It trades about 0.09 of its potential returns per unit of risk. Autozone is currently generating about 0.15 per unit of risk. If you would invest  12,727  in Walmart on May 15, 2022 and sell it today you would earn a total of  495.00  from holding Walmart or generate 3.89% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Walmart  vs.  Autozone

 Performance (%) 
       Timeline  
Walmart 
Walmart Performance
0 of 100
Over the last 90 days Walmart has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's primary indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Walmart Price Channel

Autozone 
Autozone Performance
7 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Autozone are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent basic indicators, Autozone may actually be approaching a critical reversion point that can send shares even higher in September 2022.

Autozone Price Channel

Walmart and Autozone Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Walmart and Autozone

The main advantage of trading using opposite Walmart and Autozone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart 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.
The idea behind Walmart 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.
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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