Correlation Between Advance Auto and Upbound
Can any of the company-specific risk be diversified away by investing in both Advance Auto and Upbound 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 Upbound 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 Upbound Group, you can compare the effects of market volatilities on Advance Auto and Upbound 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 Upbound. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advance Auto and Upbound.
Diversification Opportunities for Advance Auto and Upbound
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Advance and Upbound is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Advance Auto Parts and Upbound Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Upbound Group 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 Upbound. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Upbound Group has no effect on the direction of Advance Auto i.e., Advance Auto and Upbound go up and down completely randomly.
Pair Corralation between Advance Auto and Upbound
Considering the 90-day investment horizon Advance Auto is expected to generate 1.11 times less return on investment than Upbound. In addition to that, Advance Auto is 1.14 times more volatile than Upbound Group. It trades about 0.29 of its total potential returns per unit of risk. Upbound Group is currently generating about 0.37 per unit of volatility. If you would invest 2,673 in Upbound Group on August 30, 2024 and sell it today you would earn a total of 772.00 from holding Upbound Group or generate 28.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Advance Auto Parts vs. Upbound Group
Performance |
| Timeline |
| Advance Auto Parts |
| Upbound Group |
Advance Auto and Upbound Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advance Auto and Upbound
The main advantage of trading using opposite Advance Auto and Upbound positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advance Auto position performs unexpectedly, Upbound 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 Upbound will offset losses from the drop in Upbound's long position.| Advance Auto vs. AutoZone | Advance Auto vs. Tractor Supply | Advance Auto vs. Genuine Parts Co | Advance Auto vs. Five Below |
| Upbound vs. European Wax Center | Upbound vs. RBC Bearings Incorporated | Upbound vs. Hudson Pacific Properties | Upbound vs. Steven Madden |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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