Correlation Between LPKF Laser and AutoZone
Can any of the company-specific risk be diversified away by investing in both LPKF Laser 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 LPKF Laser and AutoZone into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LPKF Laser Electronics and AutoZone, you can compare the effects of market volatilities on LPKF Laser 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 LPKF Laser with a short position of AutoZone. Check out your portfolio center. Please also check ongoing floating volatility patterns of LPKF Laser and AutoZone.
Diversification Opportunities for LPKF Laser and AutoZone
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between LPKF and AutoZone is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding LPKF Laser Electronics and AutoZone in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AutoZone and LPKF Laser 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 LPKF Laser Electronics 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 LPKF Laser i.e., LPKF Laser and AutoZone go up and down completely randomly.
Pair Corralation between LPKF Laser and AutoZone
Assuming the 90 days horizon LPKF Laser Electronics is expected to under-perform the AutoZone. But the stock apears to be less risky and, when comparing its historical volatility, LPKF Laser Electronics is 2.1 times less risky than AutoZone. The stock trades about -0.04 of its potential returns per unit of risk. The AutoZone is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 274,500 in AutoZone on September 2, 2024 and sell it today you would earn a total of 25,500 from holding AutoZone or generate 9.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LPKF Laser Electronics vs. AutoZone
Performance |
| Timeline |
| LPKF Laser Electronics |
| AutoZone |
LPKF Laser and AutoZone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LPKF Laser and AutoZone
The main advantage of trading using opposite LPKF Laser and AutoZone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LPKF Laser 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.| LPKF Laser vs. SBA Communications Corp | LPKF Laser vs. AIR PRODCHEMICALS | LPKF Laser vs. Sterling Construction | LPKF Laser vs. DAIRY FARM INTL |
| AutoZone vs. INDOFOOD AGRI RES | AutoZone vs. LPKF Laser Electronics | AutoZone vs. SENECA FOODS A | AutoZone vs. Meiko Electronics Co |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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