Correlation Between Visa and AutoZone
Can any of the company-specific risk be diversified away by investing in both Visa 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 Visa and AutoZone into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Visa Class A and AutoZone, you can compare the effects of market volatilities on Visa 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 Visa with a short position of AutoZone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and AutoZone.
Diversification Opportunities for Visa and AutoZone
Average diversification
The 3 months correlation between Visa and AutoZone is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and AutoZone in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AutoZone and Visa 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 Visa Class A 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 Visa i.e., Visa and AutoZone go up and down completely randomly.
Pair Corralation between Visa and AutoZone
Taking into account the 90-day investment horizon Visa Class A is expected to under-perform the AutoZone. But the stock apears to be less risky and, when comparing its historical volatility, Visa Class A is 1.1 times less risky than AutoZone. The stock trades about -0.01 of its potential returns per unit of risk. The AutoZone is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 374,702 in AutoZone on May 6, 2025 and sell it today you would earn a total of 22,074 from holding AutoZone or generate 5.89% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Visa Class A vs. AutoZone
Performance |
Timeline |
Visa Class A |
AutoZone |
Visa and AutoZone Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Visa and AutoZone
The main advantage of trading using opposite Visa and AutoZone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa 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.Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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