Correlation Between AZZ Incorporated and AutoNation
Can any of the company-specific risk be diversified away by investing in both AZZ Incorporated and AutoNation 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 AZZ Incorporated and AutoNation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AZZ Incorporated and AutoNation, you can compare the effects of market volatilities on AZZ Incorporated and AutoNation 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 AZZ Incorporated with a short position of AutoNation. Check out your portfolio center. Please also check ongoing floating volatility patterns of AZZ Incorporated and AutoNation.
Diversification Opportunities for AZZ Incorporated and AutoNation
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between AZZ and AutoNation is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding AZZ Incorporated and AutoNation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AutoNation and AZZ Incorporated 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 AZZ Incorporated are associated (or correlated) with AutoNation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AutoNation has no effect on the direction of AZZ Incorporated i.e., AZZ Incorporated and AutoNation go up and down completely randomly.
Pair Corralation between AZZ Incorporated and AutoNation
Considering the 90-day investment horizon AZZ Incorporated is expected to generate 1.33 times more return on investment than AutoNation. However, AZZ Incorporated is 1.33 times more volatile than AutoNation. It trades about 0.12 of its potential returns per unit of risk. AutoNation is currently generating about 0.01 per unit of risk. If you would invest 8,243 in AZZ Incorporated on August 29, 2024 and sell it today you would earn a total of 991.00 from holding AZZ Incorporated or generate 12.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AZZ Incorporated vs. AutoNation
Performance |
| Timeline |
| AZZ Incorporated |
| AutoNation |
AZZ Incorporated and AutoNation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AZZ Incorporated and AutoNation
The main advantage of trading using opposite AZZ Incorporated and AutoNation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AZZ Incorporated position performs unexpectedly, AutoNation 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 AutoNation will offset losses from the drop in AutoNation's long position.| AZZ Incorporated vs. Maximus | AZZ Incorporated vs. ABM Industries Incorporated | AZZ Incorporated vs. CBIZ Inc | AZZ Incorporated vs. Cass Information Systems |
| AutoNation vs. Sonic Automotive | AutoNation vs. Lithia Motors | AutoNation vs. Asbury Automotive Group | AutoNation vs. Penske Automotive Group |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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