Correlation Between AutoNation and Nordstrom
Can any of the company-specific risk be diversified away by investing in both AutoNation and Nordstrom 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 AutoNation and Nordstrom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AutoNation and Nordstrom, you can compare the effects of market volatilities on AutoNation and Nordstrom 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 AutoNation with a short position of Nordstrom. Check out your portfolio center. Please also check ongoing floating volatility patterns of AutoNation and Nordstrom.
Diversification Opportunities for AutoNation and Nordstrom
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between AutoNation and Nordstrom is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding AutoNation and Nordstrom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordstrom and AutoNation 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 AutoNation are associated (or correlated) with Nordstrom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordstrom has no effect on the direction of AutoNation i.e., AutoNation and Nordstrom go up and down completely randomly.
Pair Corralation between AutoNation and Nordstrom
Allowing for the 90-day total investment horizon AutoNation is expected to generate 1.54 times less return on investment than Nordstrom. But when comparing it to its historical volatility, AutoNation is 1.31 times less risky than Nordstrom. It trades about 0.04 of its potential returns per unit of risk. Nordstrom is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,649 in Nordstrom on August 27, 2024 and sell it today you would earn a total of 675.00 from holding Nordstrom or generate 40.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AutoNation vs. Nordstrom
Performance |
| Timeline |
| AutoNation |
| Nordstrom |
AutoNation and Nordstrom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AutoNation and Nordstrom
The main advantage of trading using opposite AutoNation and Nordstrom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AutoNation position performs unexpectedly, Nordstrom 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 Nordstrom will offset losses from the drop in Nordstrom's long position.| AutoNation vs. Kingsway Financial Services | AutoNation vs. KAR Auction Services | AutoNation vs. Cango Inc | AutoNation vs. Vroom Inc |
| Nordstrom vs. Kohls Corp | Nordstrom vs. Dillards | Nordstrom vs. Marks Spencer Group | Nordstrom vs. Marks and Spencer |
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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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