Correlation Between AutoZone and KAR Auction
Can any of the company-specific risk be diversified away by investing in both AutoZone and KAR Auction 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 KAR Auction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AutoZone and KAR Auction Services, you can compare the effects of market volatilities on AutoZone and KAR Auction 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 KAR Auction. Check out your portfolio center. Please also check ongoing floating volatility patterns of AutoZone and KAR Auction.
Diversification Opportunities for AutoZone and KAR Auction
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between AutoZone and KAR is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding AutoZone and KAR Auction Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KAR Auction Services 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 KAR Auction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KAR Auction Services has no effect on the direction of AutoZone i.e., AutoZone and KAR Auction go up and down completely randomly.
Pair Corralation between AutoZone and KAR Auction
Assuming the 90 days horizon AutoZone is expected to generate 0.81 times more return on investment than KAR Auction. However, AutoZone is 1.24 times less risky than KAR Auction. It trades about 0.42 of its potential returns per unit of risk. KAR Auction Services is currently generating about 0.17 per unit of risk. If you would invest 292,400 in AutoZone on September 18, 2024 and sell it today you would earn a total of 23,500 from holding AutoZone or generate 8.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
AutoZone vs. KAR Auction Services
Performance |
| Timeline |
| AutoZone |
| KAR Auction Services |
AutoZone and KAR Auction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AutoZone and KAR Auction
The main advantage of trading using opposite AutoZone and KAR Auction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AutoZone position performs unexpectedly, KAR Auction 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 KAR Auction will offset losses from the drop in KAR Auction's long position.| AutoZone vs. COMPUTERSHARE | AutoZone vs. Verizon Communications | AutoZone vs. Consolidated Communications Holdings | AutoZone vs. Universal Display |
| KAR Auction vs. United Internet AG | KAR Auction vs. Verizon Communications | KAR Auction vs. ON SEMICONDUCTOR | KAR Auction vs. Spirent Communications plc |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
Other Complementary Tools
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio |