Correlation Between AutoZone and Genuine Parts
Can any of the company-specific risk be diversified away by investing in both AutoZone and Genuine Parts 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 Genuine Parts into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AutoZone and Genuine Parts, you can compare the effects of market volatilities on AutoZone and Genuine Parts 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 Genuine Parts. Check out your portfolio center. Please also check ongoing floating volatility patterns of AutoZone and Genuine Parts.
Diversification Opportunities for AutoZone and Genuine Parts
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between AutoZone and Genuine is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding AutoZone and Genuine Parts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genuine Parts 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 Genuine Parts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genuine Parts has no effect on the direction of AutoZone i.e., AutoZone and Genuine Parts go up and down completely randomly.
Pair Corralation between AutoZone and Genuine Parts
Assuming the 90 days horizon AutoZone is expected to generate 1.58 times less return on investment than Genuine Parts. But when comparing it to its historical volatility, AutoZone is 1.17 times less risky than Genuine Parts. It trades about 0.22 of its potential returns per unit of risk. Genuine Parts is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 10,425 in Genuine Parts on September 2, 2024 and sell it today you would earn a total of 1,580 from holding Genuine Parts or generate 15.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AutoZone vs. Genuine Parts
Performance |
| Timeline |
| AutoZone |
| Genuine Parts |
AutoZone and Genuine Parts Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AutoZone and Genuine Parts
The main advantage of trading using opposite AutoZone and Genuine Parts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AutoZone position performs unexpectedly, Genuine Parts 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 Genuine Parts will offset losses from the drop in Genuine Parts' long position.| AutoZone vs. INDOFOOD AGRI RES | AutoZone vs. LPKF Laser Electronics | AutoZone vs. SENECA FOODS A | AutoZone vs. Meiko Electronics Co |
| Genuine Parts vs. MercadoLibre | Genuine Parts vs. AutoZone | Genuine Parts vs. Superior Plus Corp | Genuine Parts 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 CEOs Directory module to screen CEOs from public companies around the world.
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