Correlation Between Advance Auto and Original Bark
Can any of the company-specific risk be diversified away by investing in both Advance Auto and Original Bark 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 Original Bark 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 Original Bark Co, you can compare the effects of market volatilities on Advance Auto and Original Bark 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 Original Bark. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advance Auto and Original Bark.
Diversification Opportunities for Advance Auto and Original Bark
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Advance and Original is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Advance Auto Parts and Original Bark Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Original Bark 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 Original Bark. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Original Bark has no effect on the direction of Advance Auto i.e., Advance Auto and Original Bark go up and down completely randomly.
Pair Corralation between Advance Auto and Original Bark
Considering the 90-day investment horizon Advance Auto Parts is expected to under-perform the Original Bark. But the stock apears to be less risky and, when comparing its historical volatility, Advance Auto Parts is 1.47 times less risky than Original Bark. The stock trades about -0.07 of its potential returns per unit of risk. The Original Bark Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 159.00 in Original Bark Co on August 24, 2024 and sell it today you would earn a total of 18.00 from holding Original Bark Co or generate 11.32% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Advance Auto Parts vs. Original Bark Co
Performance |
Timeline |
Advance Auto Parts |
Original Bark |
Advance Auto and Original Bark Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Advance Auto and Original Bark
The main advantage of trading using opposite Advance Auto and Original Bark positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advance Auto position performs unexpectedly, Original Bark 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 Original Bark will offset losses from the drop in Original Bark's long position.Advance Auto vs. AutoZone | Advance Auto vs. Tractor Supply | Advance Auto vs. Genuine Parts Co | Advance Auto vs. Five Below |
Original Bark vs. AutoZone | Original Bark vs. Best Buy Co | Original Bark vs. Dicks Sporting Goods | Original Bark vs. Advance Auto Parts |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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