Correlation Between AutoZone and Big 5
Can any of the company-specific risk be diversified away by investing in both AutoZone and Big 5 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 AutoZone and Big 5 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AutoZone and Big 5 Sporting, you can compare the effects of market volatilities on AutoZone and Big 5 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 AutoZone with a short position of Big 5. Check out your portfolio center. Please also check ongoing floating volatility patterns of AutoZone and Big 5.
Diversification Opportunities for AutoZone and Big 5
Very good diversification
The 3 months correlation between AutoZone and Big is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding AutoZone and Big 5 Sporting in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big 5 Sporting and AutoZone 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 AutoZone are associated (or correlated) with Big 5. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big 5 Sporting has no effect on the direction of AutoZone i.e., AutoZone and Big 5 go up and down completely randomly.
Pair Corralation between AutoZone and Big 5
Assuming the 90 days horizon AutoZone is expected to generate 0.53 times more return on investment than Big 5. However, AutoZone is 1.87 times less risky than Big 5. It trades about 0.2 of its potential returns per unit of risk. Big 5 Sporting is currently generating about 0.08 per unit of risk. If you would invest 277,800 in AutoZone on August 31, 2024 and sell it today you would earn a total of 23,700 from holding AutoZone or generate 8.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AutoZone vs. Big 5 Sporting
Performance |
| Timeline |
| AutoZone |
| Big 5 Sporting |
AutoZone and Big 5 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AutoZone and Big 5
The main advantage of trading using opposite AutoZone and Big 5 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AutoZone position performs unexpectedly, Big 5 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 Big 5 will offset losses from the drop in Big 5's long position.| AutoZone vs. BJs Restaurants | AutoZone vs. Darden Restaurants | AutoZone vs. SAFETY MEDICAL PROD | AutoZone vs. Treasury Wine Estates |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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