Correlation Between AutoZone and BNP Paribas

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

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

Diversification Opportunities for AutoZone and BNP Paribas

-0.55

Correlation Coefficient

AutoZone  BNP Paribas

Excellent diversification

The 3 months correlation between AutoZone and BNP is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding AutoZone and BNP Paribas SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BNP Paribas SA and AutoZone 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 AutoZone are associated (or correlated) with BNP Paribas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BNP Paribas SA has no effect on the direction of AutoZone i.e., AutoZone and BNP Paribas go up and down completely randomly.

Pair Corralation between AutoZone and BNP Paribas

Assuming the 90 days horizon AutoZone is expected to generate 1.1 times more return on investment than BNP Paribas. However, AutoZone is 1.1 times more volatile than BNP Paribas SA. It trades about 0.16 of its potential returns per unit of risk. BNP Paribas SA is currently generating about -0.09 per unit of risk. If you would invest  269,500  in AutoZone on September 22, 2024 and sell it today you would earn a total of  41,700  from holding AutoZone or generate 15.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.48%
Values	Daily Returns

AutoZone  vs.  BNP Paribas SA

AutoZone

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AutoZone are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, AutoZone reported solid returns over the last few months and may actually be approaching a breakup point.

BNP Paribas SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BNP Paribas SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with AutoZone and BNP Paribas

The main advantage of trading using opposite AutoZone and BNP Paribas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AutoZone position performs unexpectedly, BNP Paribas 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 BNP Paribas will offset losses from the drop in BNP Paribas' long position.

The idea behind AutoZone and BNP Paribas SA 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.