Correlation Between Genuine Parts and AutoZone
Can any of the company-specific risk be diversified away by investing in both Genuine Parts 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 Genuine Parts and AutoZone into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Genuine Parts Co and AutoZone, you can compare the effects of market volatilities on Genuine Parts 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 Genuine Parts with a short position of AutoZone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genuine Parts and AutoZone.
Diversification Opportunities for Genuine Parts and AutoZone
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Genuine and AutoZone is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Genuine Parts Co and AutoZone in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AutoZone and Genuine Parts 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 Genuine Parts Co 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 Genuine Parts i.e., Genuine Parts and AutoZone go up and down completely randomly.
Pair Corralation between Genuine Parts and AutoZone
Considering the 90-day investment horizon Genuine Parts Co is expected to under-perform the AutoZone. In addition to that, Genuine Parts is 1.34 times more volatile than AutoZone. It trades about -0.03 of its total potential returns per unit of risk. AutoZone is currently generating about 0.03 per unit of volatility. If you would invest 257,159 in AutoZone on August 23, 2024 and sell it today you would earn a total of 47,799 from holding AutoZone or generate 18.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Genuine Parts Co vs. AutoZone
Performance |
| Timeline |
| Genuine Parts |
| AutoZone |
Genuine Parts and AutoZone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Genuine Parts and AutoZone
The main advantage of trading using opposite Genuine Parts and AutoZone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genuine Parts 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.| Genuine Parts vs. Dover | Genuine Parts vs. Cincinnati Financial | Genuine Parts vs. Leggett Platt Incorporated | Genuine Parts vs. Illinois Tool Works |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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