Correlation Between Sally Beauty and AutoZone
Can any of the company-specific risk be diversified away by investing in both Sally Beauty 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 Sally Beauty and AutoZone into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sally Beauty Holdings and AutoZone, you can compare the effects of market volatilities on Sally Beauty 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 Sally Beauty with a short position of AutoZone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sally Beauty and AutoZone.
Diversification Opportunities for Sally Beauty and AutoZone
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sally and AutoZone is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Sally Beauty Holdings and AutoZone in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AutoZone and Sally Beauty 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 Sally Beauty Holdings 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 Sally Beauty i.e., Sally Beauty and AutoZone go up and down completely randomly.
Pair Corralation between Sally Beauty and AutoZone
Considering the 90-day investment horizon Sally Beauty Holdings is expected to generate 2.11 times more return on investment than AutoZone. However, Sally Beauty is 2.11 times more volatile than AutoZone. It trades about 0.09 of its potential returns per unit of risk. AutoZone is currently generating about 0.01 per unit of risk. If you would invest 1,340 in Sally Beauty Holdings on August 28, 2024 and sell it today you would earn a total of 69.00 from holding Sally Beauty Holdings or generate 5.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sally Beauty Holdings vs. AutoZone
Performance |
| Timeline |
| Sally Beauty Holdings |
| AutoZone |
Sally Beauty and AutoZone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sally Beauty and AutoZone
The main advantage of trading using opposite Sally Beauty and AutoZone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sally Beauty 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.| Sally Beauty vs. Oriental Culture Holding | Sally Beauty vs. Hour Loop | Sally Beauty vs. Qurate Retail Series | Sally Beauty vs. Emerge Commerce |
| 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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