Correlation Between Duluth Holdings and AutoZone

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

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

Diversification Opportunities for Duluth Holdings and AutoZone

-0.5

Correlation Coefficient

Duluth Holdings  AutoZone

Very good diversification

The 3 months correlation between Duluth and AutoZone is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Duluth Holdings and AutoZone in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AutoZone and Duluth Holdings 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 Duluth 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 Duluth Holdings i.e., Duluth Holdings and AutoZone go up and down completely randomly.

Pair Corralation between Duluth Holdings and AutoZone

Given the investment horizon of 90 days Duluth Holdings is expected to under-perform the AutoZone. In addition to that, Duluth Holdings is 1.85 times more volatile than AutoZone. It trades about -0.47 of its total potential returns per unit of risk. AutoZone is currently generating about 0.07 per unit of volatility. If you would invest  319,010  in AutoZone on September 28, 2024 and sell it today you would earn a total of  5,152  from holding AutoZone or generate 1.61% return on investment over 90 days.

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

Duluth Holdings  vs.  AutoZone

Duluth Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Duluth Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

AutoZone

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AutoZone are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, AutoZone is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Duluth Holdings and AutoZone

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

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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.