Correlation Between Advance Auto and Lands End
Can any of the company-specific risk be diversified away by investing in both Advance Auto and Lands End 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 Lands End 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 Lands End, you can compare the effects of market volatilities on Advance Auto and Lands End 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 Lands End. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advance Auto and Lands End.
Diversification Opportunities for Advance Auto and Lands End
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Advance and Lands is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Advance Auto Parts and Lands End in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lands End 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 Lands End. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lands End has no effect on the direction of Advance Auto i.e., Advance Auto and Lands End go up and down completely randomly.
Pair Corralation between Advance Auto and Lands End
Considering the 90-day investment horizon Advance Auto Parts is expected to under-perform the Lands End. But the stock apears to be less risky and, when comparing its historical volatility, Advance Auto Parts is 1.63 times less risky than Lands End. The stock trades about -0.06 of its potential returns per unit of risk. The Lands End is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,500 in Lands End on January 16, 2024 and sell it today you would lose (265.00) from holding Lands End or give up 17.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Advance Auto Parts vs. Lands End
Performance |
| Timeline |
| Advance Auto Parts |
| Lands End |
Advance Auto and Lands End Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advance Auto and Lands End
The main advantage of trading using opposite Advance Auto and Lands End positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advance Auto position performs unexpectedly, Lands End 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 Lands End will offset losses from the drop in Lands End's long position.| Advance Auto vs. Cazoo Group | Advance Auto vs. U Power Limited | Advance Auto vs. SunCar Technology Group | Advance Auto vs. Jiuzi Holdings |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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