Correlation Between AutoZone and DICKS Sporting
Can any of the company-specific risk be diversified away by investing in both AutoZone and DICKS Sporting 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 DICKS Sporting into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AutoZone and DICKS Sporting Goods, you can compare the effects of market volatilities on AutoZone and DICKS Sporting 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 DICKS Sporting. Check out your portfolio center. Please also check ongoing floating volatility patterns of AutoZone and DICKS Sporting.
Diversification Opportunities for AutoZone and DICKS Sporting
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between AutoZone and DICKS is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding AutoZone and DICKS Sporting Goods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DICKS Sporting Goods 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 DICKS Sporting. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DICKS Sporting Goods has no effect on the direction of AutoZone i.e., AutoZone and DICKS Sporting go up and down completely randomly.
Pair Corralation between AutoZone and DICKS Sporting
Assuming the 90 days horizon AutoZone is expected to generate 1.55 times less return on investment than DICKS Sporting. But when comparing it to its historical volatility, AutoZone is 1.59 times less risky than DICKS Sporting. It trades about 0.2 of its potential returns per unit of risk. DICKS Sporting Goods is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 18,442 in DICKS Sporting Goods on August 31, 2024 and sell it today you would earn a total of 2,408 from holding DICKS Sporting Goods or generate 13.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AutoZone vs. DICKS Sporting Goods
Performance |
| Timeline |
| AutoZone |
| DICKS Sporting Goods |
AutoZone and DICKS Sporting Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AutoZone and DICKS Sporting
The main advantage of trading using opposite AutoZone and DICKS Sporting positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AutoZone position performs unexpectedly, DICKS Sporting 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 DICKS Sporting will offset losses from the drop in DICKS Sporting's long position.| AutoZone vs. BJs Restaurants | AutoZone vs. Darden Restaurants | AutoZone vs. SAFETY MEDICAL PROD | AutoZone vs. Treasury Wine Estates |
| DICKS Sporting vs. MercadoLibre | DICKS Sporting vs. AutoZone | DICKS Sporting vs. Superior Plus Corp | DICKS Sporting vs. NMI Holdings |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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