Correlation Between VARIOUS EATERIES and AutoZone

Can any of the company-specific risk be diversified away by investing in both VARIOUS EATERIES 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 VARIOUS EATERIES and AutoZone into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between VARIOUS EATERIES LS and AutoZone, you can compare the effects of market volatilities on VARIOUS EATERIES 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 VARIOUS EATERIES with a short position of AutoZone. Check out your portfolio center. Please also check ongoing floating volatility patterns of VARIOUS EATERIES and AutoZone.

Diversification Opportunities for VARIOUS EATERIES and AutoZone

-0.66

Correlation Coefficient

VARIOUS EATERIES  AutoZone

Excellent diversification

The 3 months correlation between VARIOUS and AutoZone is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding VARIOUS EATERIES LS and AutoZone in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AutoZone and VARIOUS EATERIES 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 VARIOUS EATERIES LS 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 VARIOUS EATERIES i.e., VARIOUS EATERIES and AutoZone go up and down completely randomly.

Pair Corralation between VARIOUS EATERIES and AutoZone

Assuming the 90 days horizon VARIOUS EATERIES LS is expected to under-perform the AutoZone. In addition to that, VARIOUS EATERIES is 3.71 times more volatile than AutoZone. It trades about -0.13 of its total potential returns per unit of risk. AutoZone is currently generating about 0.15 per unit of volatility. If you would invest  308,500  in AutoZone on December 30, 2024 and sell it today you would earn a total of  37,800  from holding AutoZone or generate 12.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

VARIOUS EATERIES LS  vs.  AutoZone

VARIOUS EATERIES

Risk-Adjusted Performance

Very Weak

Over the last 90 days VARIOUS EATERIES LS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

AutoZone

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AutoZone are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, AutoZone may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with VARIOUS EATERIES and AutoZone

The main advantage of trading using opposite VARIOUS EATERIES and AutoZone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VARIOUS EATERIES 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.

The idea behind VARIOUS EATERIES LS and AutoZone pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.