Correlation Between Card Factory and AutoZone
Can any of the company-specific risk be diversified away by investing in both Card Factory and AutoZone 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 Card Factory and AutoZone into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Card Factory plc and AutoZone, you can compare the effects of market volatilities on Card Factory and AutoZone 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 Card Factory with a short position of AutoZone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Card Factory and AutoZone.
Diversification Opportunities for Card Factory and AutoZone
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Card and AutoZone is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Card Factory plc and AutoZone in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AutoZone and Card Factory 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 Card Factory plc are associated (or correlated) with AutoZone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AutoZone has no effect on the direction of Card Factory i.e., Card Factory and AutoZone go up and down completely randomly.
Pair Corralation between Card Factory and AutoZone
Assuming the 90 days horizon Card Factory plc is expected to under-perform the AutoZone. In addition to that, Card Factory is 5.09 times more volatile than AutoZone. It trades about -0.26 of its total potential returns per unit of risk. AutoZone is currently generating about -0.02 per unit of volatility. If you would invest 324,223 in AutoZone on October 24, 2024 and sell it today you would lose (1,383) from holding AutoZone or give up 0.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 90.0% |
| Values | Daily Returns |
Card Factory plc vs. AutoZone
Performance |
| Timeline |
| Card Factory plc |
| AutoZone |
Card Factory and AutoZone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Card Factory and AutoZone
The main advantage of trading using opposite Card Factory and AutoZone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Card Factory position performs unexpectedly, AutoZone 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 AutoZone will offset losses from the drop in AutoZone's long position.| Card Factory vs. Dixons Carphone plc | Card Factory vs. Ceconomy AG ADR | Card Factory vs. Tandy Leather Factory | Card Factory vs. Green River Gold |
| AutoZone vs. Advance Auto Parts | AutoZone vs. Tractor Supply | AutoZone vs. Genuine Parts Co | AutoZone vs. Five Below |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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