Correlation Between AKA Brands and AutoNation
Can any of the company-specific risk be diversified away by investing in both AKA Brands and AutoNation 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 AKA Brands and AutoNation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AKA Brands Holding and AutoNation, you can compare the effects of market volatilities on AKA Brands and AutoNation 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 AKA Brands with a short position of AutoNation. Check out your portfolio center. Please also check ongoing floating volatility patterns of AKA Brands and AutoNation.
Diversification Opportunities for AKA Brands and AutoNation
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between AKA and AutoNation is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding AKA Brands Holding and AutoNation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AutoNation and AKA Brands 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 AKA Brands Holding are associated (or correlated) with AutoNation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AutoNation has no effect on the direction of AKA Brands i.e., AKA Brands and AutoNation go up and down completely randomly.
Pair Corralation between AKA Brands and AutoNation
Considering the 90-day investment horizon AKA Brands Holding is expected to under-perform the AutoNation. In addition to that, AKA Brands is 4.32 times more volatile than AutoNation. It trades about -0.03 of its total potential returns per unit of risk. AutoNation is currently generating about 0.35 per unit of volatility. If you would invest 17,299 in AutoNation on November 5, 2024 and sell it today you would earn a total of 1,556 from holding AutoNation or generate 8.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AKA Brands Holding vs. AutoNation
Performance |
| Timeline |
| AKA Brands Holding |
| AutoNation |
AKA Brands and AutoNation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AKA Brands and AutoNation
The main advantage of trading using opposite AKA Brands and AutoNation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AKA Brands position performs unexpectedly, AutoNation 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 AutoNation will offset losses from the drop in AutoNation's long position.| AKA Brands vs. Brilliant Earth Group | AKA Brands vs. Lulus Fashion Lounge | AKA Brands vs. Torrid Holdings | AKA Brands vs. Aveanna Healthcare Holdings |
| AutoNation vs. Sonic Automotive | AutoNation vs. Lithia Motors | AutoNation vs. Asbury Automotive Group | AutoNation vs. Penske Automotive Group |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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