Correlation Between AutoZone and National Vision

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Can any of the company-specific risk be diversified away by investing in both AutoZone and National Vision 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 National Vision into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AutoZone and National Vision Holdings, you can compare the effects of market volatilities on AutoZone and National Vision 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 National Vision. Check out your portfolio center. Please also check ongoing floating volatility patterns of AutoZone and National Vision.

Diversification Opportunities for AutoZone and National Vision

0.03
  Correlation Coefficient

Significant diversification

The 3 months correlation between AutoZone and National is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding AutoZone and National Vision Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Vision Holdings 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 National Vision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Vision Holdings has no effect on the direction of AutoZone i.e., AutoZone and National Vision go up and down completely randomly.

Pair Corralation between AutoZone and National Vision

Considering the 90-day investment horizon AutoZone is expected to generate 2.16 times less return on investment than National Vision. But when comparing it to its historical volatility, AutoZone is 1.88 times less risky than National Vision. It trades about 0.22 of its potential returns per unit of risk. National Vision Holdings is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  1,054  in National Vision Holdings on November 9, 2024 and sell it today you would earn a total of  114.00  from holding National Vision Holdings or generate 10.82% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

AutoZone  vs.  National Vision Holdings

 Performance 
       Timeline  
AutoZone 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in AutoZone are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, AutoZone may actually be approaching a critical reversion point that can send shares even higher in March 2025.
National Vision Holdings 

Risk-Adjusted Performance

Weak

 
Weak
 
Strong
Over the last 90 days National Vision Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, National Vision is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

AutoZone and National Vision Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with AutoZone and National Vision

The main advantage of trading using opposite AutoZone and National Vision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AutoZone position performs unexpectedly, National Vision 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 National Vision will offset losses from the drop in National Vision's long position.
The idea behind AutoZone and National Vision Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.

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