Correlation Between AutoZone and GrowGeneration Corp

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

Diversification Opportunities for AutoZone and GrowGeneration Corp

AutoZoneGrowGenerationDiversified AwayAutoZoneGrowGenerationDiversified Away100%
-0.65
  Correlation Coefficient

Excellent diversification

The 3 months correlation between AutoZone and GrowGeneration is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding AutoZone and GrowGeneration Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GrowGeneration Corp 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 GrowGeneration Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GrowGeneration Corp has no effect on the direction of AutoZone i.e., AutoZone and GrowGeneration Corp go up and down completely randomly.

Pair Corralation between AutoZone and GrowGeneration Corp

Considering the 90-day investment horizon AutoZone is expected to generate 0.25 times more return on investment than GrowGeneration Corp. However, AutoZone is 4.05 times less risky than GrowGeneration Corp. It trades about 0.07 of its potential returns per unit of risk. GrowGeneration Corp is currently generating about -0.15 per unit of risk. If you would invest  337,282  in AutoZone on November 27, 2024 and sell it today you would earn a total of  5,139  from holding AutoZone or generate 1.52% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

AutoZone  vs.  GrowGeneration Corp

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -20-1001020
JavaScript chart by amCharts 3.21.15AZO GRWG
       Timeline  
AutoZone 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in AutoZone are ranked lower than 8 (%) 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.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb3,1003,1503,2003,2503,3003,3503,4003,450
GrowGeneration Corp 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days GrowGeneration Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb1.31.41.51.61.71.81.922.1

AutoZone and GrowGeneration Corp Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-3.59-2.69-1.79-0.890.0150.961.922.873.83 0.050.100.150.200.250.30
JavaScript chart by amCharts 3.21.15AZO GRWG
       Returns  

Pair Trading with AutoZone and GrowGeneration Corp

The main advantage of trading using opposite AutoZone and GrowGeneration Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AutoZone position performs unexpectedly, GrowGeneration Corp 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 GrowGeneration Corp will offset losses from the drop in GrowGeneration Corp's long position.
The idea behind AutoZone and GrowGeneration Corp 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.

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