Correlation Between OReilly Automotive and Lazydays Holdings
Can any of the company-specific risk be diversified away by investing in both OReilly Automotive and Lazydays Holdings 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 OReilly Automotive and Lazydays Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between OReilly Automotive and Lazydays Holdings, you can compare the effects of market volatilities on OReilly Automotive and Lazydays Holdings 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 OReilly Automotive with a short position of Lazydays Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of OReilly Automotive and Lazydays Holdings.
Diversification Opportunities for OReilly Automotive and Lazydays Holdings
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between OReilly and Lazydays is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding OReilly Automotive and Lazydays Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lazydays Holdings and OReilly Automotive 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 OReilly Automotive are associated (or correlated) with Lazydays Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lazydays Holdings has no effect on the direction of OReilly Automotive i.e., OReilly Automotive and Lazydays Holdings go up and down completely randomly.
Pair Corralation between OReilly Automotive and Lazydays Holdings
Given the investment horizon of 90 days OReilly Automotive is expected to under-perform the Lazydays Holdings. But the stock apears to be less risky and, when comparing its historical volatility, OReilly Automotive is 6.18 times less risky than Lazydays Holdings. The stock trades about -0.23 of its potential returns per unit of risk. The Lazydays Holdings is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 94.00 in Lazydays Holdings on October 7, 2024 and sell it today you would lose (6.00) from holding Lazydays Holdings or give up 6.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
OReilly Automotive vs. Lazydays Holdings
Performance |
| Timeline |
| OReilly Automotive |
| Lazydays Holdings |
OReilly Automotive and Lazydays Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OReilly Automotive and Lazydays Holdings
The main advantage of trading using opposite OReilly Automotive and Lazydays Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OReilly Automotive position performs unexpectedly, Lazydays Holdings 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 Lazydays Holdings will offset losses from the drop in Lazydays Holdings' long position.| OReilly Automotive vs. Dicks Sporting Goods | OReilly Automotive vs. Ulta Beauty | OReilly Automotive vs. Williams Sonoma | OReilly Automotive vs. RH |
| Lazydays Holdings vs. Group 1 Automotive | Lazydays Holdings vs. Sonic Automotive | Lazydays Holdings vs. Penske Automotive Group | Lazydays Holdings vs. Asbury 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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