Correlation Between WIMFARM SA and AutoZone

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

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

Diversification Opportunities for WIMFARM SA and AutoZone

0.04

Correlation Coefficient

WIMFARM SA  AutoZone

Significant diversification

The 3 months correlation between WIMFARM and AutoZone is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding WIMFARM SA EO and AutoZone in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AutoZone and WIMFARM SA 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 WIMFARM SA EO 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 WIMFARM SA i.e., WIMFARM SA and AutoZone go up and down completely randomly.

Pair Corralation between WIMFARM SA and AutoZone

Assuming the 90 days horizon WIMFARM SA EO is expected to under-perform the AutoZone. In addition to that, WIMFARM SA is 2.9 times more volatile than AutoZone. It trades about -0.06 of its total potential returns per unit of risk. AutoZone is currently generating about 0.06 per unit of volatility. If you would invest  242,000  in AutoZone on October 4, 2024 and sell it today you would earn a total of  74,400  from holding AutoZone or generate 30.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.7%
Values	Daily Returns

WIMFARM SA EO  vs.  AutoZone

WIMFARM SA EO

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in WIMFARM SA EO are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, WIMFARM SA reported solid returns over the last few months and may actually be approaching a breakup point.

AutoZone

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days AutoZone has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly weak basic indicators, AutoZone may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with WIMFARM SA and AutoZone

The main advantage of trading using opposite WIMFARM SA and AutoZone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WIMFARM SA 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 WIMFARM SA EO 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.