Correlation Between Designer Brands and AutoZone

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

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

Diversification Opportunities for Designer Brands and AutoZone

0.42

Correlation Coefficient

Designer Brands  AutoZone

Very weak diversification

The 3 months correlation between Designer and AutoZone is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Designer Brands and AutoZone in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AutoZone and Designer Brands 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 Designer Brands 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 Designer Brands i.e., Designer Brands and AutoZone go up and down completely randomly.

Pair Corralation between Designer Brands and AutoZone

Considering the 90-day investment horizon Designer Brands is expected to generate 2.47 times less return on investment than AutoZone. In addition to that, Designer Brands is 4.5 times more volatile than AutoZone. It trades about 0.0 of its total potential returns per unit of risk. AutoZone is currently generating about 0.03 per unit of volatility. If you would invest  377,555  in AutoZone on May 5, 2025 and sell it today you would earn a total of  8,331  from holding AutoZone or generate 2.21% return on investment over 90 days.

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

Designer Brands  vs.  AutoZone

Designer Brands

Risk-Adjusted Performance

Very Weak

Over the last 90 days Designer Brands has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental drivers, Designer Brands is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

AutoZone

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AutoZone are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, AutoZone is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Designer Brands and AutoZone

The main advantage of trading using opposite Designer Brands and AutoZone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Designer Brands 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 Designer Brands 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.