Correlation Between SP 500 and Autozone

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Can any of the company-specific risk be diversified away by investing in both SP 500 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 SP 500 and Autozone into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SP 500 Technology and Autozone, you can compare the effects of market volatilities on SP 500 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 SP 500 with a short position of Autozone. Check out your portfolio center. Please also check ongoing floating volatility patterns of SP 500 and Autozone.

Diversification Opportunities for SP 500 and Autozone

0.3
  Correlation Coefficient

Weak diversification

The 3 months correlation between SP 500 and Autozone is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding SP 500 Technology and Autozone in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autozone and SP 500 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 SP 500 Technology 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 SP 500 i.e., SP 500 and Autozone go up and down completely randomly.

Pair Corralation between SP 500 and Autozone

Considering the 90-day investment horizon SP 500 Technology is expected to under-perform the Autozone. But the etf apears to be less risky and, when comparing its historical volatility, SP 500 Technology is 1.02 times less risky than Autozone. The etf trades about -0.04 of its potential returns per unit of risk. The Autozone is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  190,773  in Autozone on March 28, 2022 and sell it today you would earn a total of  25,118  from holding Autozone or generate 13.17% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

SP 500 Technology  vs.  Autozone

 Performance (%) 
      Timeline 
SP 500 Technology 
SP 500 Performance
0 of 100
Over the last 90 days SP 500 Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Etf's essential indicators remain fairly strong which may send shares a bit higher in July 2022. The recent confusion may also be a sign of long-lasting up-swing for the Etf traders.

SP 500 Price Channel

Autozone 
Autozone Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Autozone are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Autozone may actually be approaching a critical reversion point that can send shares even higher in July 2022.

Structure and Payout Changes

Last Split Factor
2:1
Last Split Date
1994-04-21

Autozone Price Channel

SP 500 and Autozone Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with SP 500 and Autozone

The main advantage of trading using opposite SP 500 and Autozone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SP 500 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.

SP 500 Technology

Pair trading matchups for SP 500

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The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against SP 500 as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. SP 500's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, SP 500's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to SP 500 Technology.
The idea behind SP 500 Technology 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.

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