Correlation Between Arhaus and AutoZone

Can any of the company-specific risk be diversified away by investing in both Arhaus 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 Arhaus and AutoZone into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Arhaus Inc and AutoZone, you can compare the effects of market volatilities on Arhaus 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 Arhaus with a short position of AutoZone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arhaus and AutoZone.

Diversification Opportunities for Arhaus and AutoZone

0.1

Correlation Coefficient

Arhaus  AutoZone

Average diversification

The 3 months correlation between Arhaus and AutoZone is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Arhaus Inc and AutoZone in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AutoZone and Arhaus 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 Arhaus Inc 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 Arhaus i.e., Arhaus and AutoZone go up and down completely randomly.

Pair Corralation between Arhaus and AutoZone

Given the investment horizon of 90 days Arhaus Inc is expected to generate 1.42 times more return on investment than AutoZone. However, Arhaus is 1.42 times more volatile than AutoZone. It trades about 0.1 of its potential returns per unit of risk. AutoZone is currently generating about -0.1 per unit of risk. If you would invest  904.00  in Arhaus Inc on August 20, 2024 and sell it today you would earn a total of  36.00  from holding Arhaus Inc or generate 3.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Arhaus Inc  vs.  AutoZone

Arhaus Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arhaus Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

AutoZone

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AutoZone has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, AutoZone is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Arhaus and AutoZone

The main advantage of trading using opposite Arhaus and AutoZone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arhaus 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 Arhaus Inc 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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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.