Correlation Between Advance Auto and AutoZone
Can any of the company-specific risk be diversified away by investing in both Advance Auto 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 Advance Auto and AutoZone into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advance Auto Parts and AutoZone, you can compare the effects of market volatilities on Advance Auto 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 Advance Auto with a short position of AutoZone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advance Auto and AutoZone.
Diversification Opportunities for Advance Auto and AutoZone
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Advance and AutoZone is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Advance Auto Parts and AutoZone in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AutoZone and Advance Auto 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 Advance Auto Parts 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 Advance Auto i.e., Advance Auto and AutoZone go up and down completely randomly.
Pair Corralation between Advance Auto and AutoZone
Considering the 90-day investment horizon Advance Auto Parts is expected to under-perform the AutoZone. In addition to that, Advance Auto is 2.84 times more volatile than AutoZone. It trades about -0.15 of its total potential returns per unit of risk. AutoZone is currently generating about -0.35 per unit of volatility. If you would invest 317,082 in AutoZone on January 24, 2024 and sell it today you would lose (20,916) from holding AutoZone or give up 6.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.24% |
| Values | Daily Returns |
Advance Auto Parts vs. AutoZone
Performance |
| Timeline |
| Advance Auto Parts |
| AutoZone |
Advance Auto and AutoZone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advance Auto and AutoZone
The main advantage of trading using opposite Advance Auto and AutoZone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advance Auto 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.| Advance Auto vs. AutoZone | Advance Auto vs. Tractor Supply | Advance Auto vs. Genuine Parts Co | Advance Auto vs. Five Below |
| AutoZone vs. Advance Auto Parts | AutoZone vs. Tractor Supply | AutoZone vs. Genuine Parts Co | AutoZone vs. Five Below |
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 the Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
Other Complementary Tools
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| AI Investment Finder Use AI to screen and filter profitable investment opportunities | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes |