Correlation Between Sportsmans and Advance Auto
Can any of the company-specific risk be diversified away by investing in both Sportsmans and Advance Auto 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 Sportsmans and Advance Auto into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sportsmans and Advance Auto Parts, you can compare the effects of market volatilities on Sportsmans and Advance Auto 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 Sportsmans with a short position of Advance Auto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sportsmans and Advance Auto.
Diversification Opportunities for Sportsmans and Advance Auto
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sportsmans and Advance is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Sportsmans and Advance Auto Parts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advance Auto Parts and Sportsmans 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 Sportsmans are associated (or correlated) with Advance Auto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advance Auto Parts has no effect on the direction of Sportsmans i.e., Sportsmans and Advance Auto go up and down completely randomly.
Pair Corralation between Sportsmans and Advance Auto
Given the investment horizon of 90 days Sportsmans is expected to under-perform the Advance Auto. In addition to that, Sportsmans is 1.08 times more volatile than Advance Auto Parts. It trades about -0.21 of its total potential returns per unit of risk. Advance Auto Parts is currently generating about 0.15 per unit of volatility. If you would invest 3,674 in Advance Auto Parts on August 26, 2024 and sell it today you would earn a total of 405.00 from holding Advance Auto Parts or generate 11.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sportsmans vs. Advance Auto Parts
Performance |
| Timeline |
| Sportsmans |
| Advance Auto Parts |
Sportsmans and Advance Auto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sportsmans and Advance Auto
The main advantage of trading using opposite Sportsmans and Advance Auto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sportsmans position performs unexpectedly, Advance Auto 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 Advance Auto will offset losses from the drop in Advance Auto's long position.| Sportsmans vs. MarineMax | Sportsmans vs. Build A Bear Workshop | Sportsmans vs. Leslies | Sportsmans vs. Sally Beauty Holdings |
| Advance Auto vs. AutoZone | Advance Auto vs. Tractor Supply | Advance Auto vs. Genuine Parts Co | Advance Auto 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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