Correlation Between Advance Auto and VOXX International
Can any of the company-specific risk be diversified away by investing in both Advance Auto and VOXX International 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 VOXX International 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 VOXX International, you can compare the effects of market volatilities on Advance Auto and VOXX International 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 VOXX International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advance Auto and VOXX International.
Diversification Opportunities for Advance Auto and VOXX International
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Advance and VOXX is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Advance Auto Parts and VOXX International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VOXX International 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 VOXX International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VOXX International has no effect on the direction of Advance Auto i.e., Advance Auto and VOXX International go up and down completely randomly.
Pair Corralation between Advance Auto and VOXX International
Considering the 90-day investment horizon Advance Auto Parts is expected to under-perform the VOXX International. But the stock apears to be less risky and, when comparing its historical volatility, Advance Auto Parts is 2.36 times less risky than VOXX International. The stock trades about -0.13 of its potential returns per unit of risk. The VOXX International is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 372.00 in VOXX International on August 24, 2024 and sell it today you would earn a total of 402.00 from holding VOXX International or generate 108.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Advance Auto Parts vs. VOXX International
Performance |
| Timeline |
| Advance Auto Parts |
| VOXX International |
Advance Auto and VOXX International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advance Auto and VOXX International
The main advantage of trading using opposite Advance Auto and VOXX International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advance Auto position performs unexpectedly, VOXX International 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 VOXX International will offset losses from the drop in VOXX International's long position.| Advance Auto vs. AutoZone | Advance Auto vs. Tractor Supply | Advance Auto vs. Genuine Parts Co | Advance Auto vs. Five Below |
| VOXX International vs. LG Display Co | VOXX International vs. Vizio Holding Corp | VOXX International vs. Turtle Beach Corp | VOXX International vs. Emerson Radio |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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