Correlation Between Advance Auto and Kirklands
Can any of the company-specific risk be diversified away by investing in both Advance Auto and Kirklands 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 Kirklands 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 Kirklands, you can compare the effects of market volatilities on Advance Auto and Kirklands 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 Kirklands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advance Auto and Kirklands.
Diversification Opportunities for Advance Auto and Kirklands
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Advance and Kirklands is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Advance Auto Parts and Kirklands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kirklands 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 Kirklands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kirklands has no effect on the direction of Advance Auto i.e., Advance Auto and Kirklands go up and down completely randomly.
Pair Corralation between Advance Auto and Kirklands
Considering the 90-day investment horizon Advance Auto Parts is expected to under-perform the Kirklands. But the stock apears to be less risky and, when comparing its historical volatility, Advance Auto Parts is 1.41 times less risky than Kirklands. The stock trades about -0.07 of its potential returns per unit of risk. The Kirklands is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 384.00 in Kirklands on August 23, 2024 and sell it today you would lose (225.00) from holding Kirklands or give up 58.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Advance Auto Parts vs. Kirklands
Performance |
| Timeline |
| Advance Auto Parts |
| Kirklands |
Advance Auto and Kirklands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advance Auto and Kirklands
The main advantage of trading using opposite Advance Auto and Kirklands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advance Auto position performs unexpectedly, Kirklands 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 Kirklands will offset losses from the drop in Kirklands' long position.| Advance Auto vs. AutoZone | Advance Auto vs. Tractor Supply | Advance Auto vs. Genuine Parts Co | Advance Auto vs. Five Below |
| Kirklands vs. Small Cap Core | Kirklands vs. Freedom Holding Corp | Kirklands vs. Gfl Environmental Holdings | Kirklands vs. Growth Fund Of |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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