Correlation Between 1 800 and Advance Auto

Can any of the company-specific risk be diversified away by investing in both 1 800 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 1 800 and Advance Auto into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 1 800 FLOWERSCOM and Advance Auto Parts, you can compare the effects of market volatilities on 1 800 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 1 800 with a short position of Advance Auto. Check out your portfolio center. Please also check ongoing floating volatility patterns of 1 800 and Advance Auto.

Diversification Opportunities for 1 800 and Advance Auto

-0.15

Correlation Coefficient

1 800  Advance Auto

Good diversification

The 3 months correlation between FLWS and Advance is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding 1 800 FLOWERSCOM 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 1 800 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 1 800 FLOWERSCOM 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 1 800 i.e., 1 800 and Advance Auto go up and down completely randomly.

Pair Corralation between 1 800 and Advance Auto

Given the investment horizon of 90 days 1 800 FLOWERSCOM is expected to generate 0.93 times more return on investment than Advance Auto. However, 1 800 FLOWERSCOM is 1.07 times less risky than Advance Auto. It trades about -0.03 of its potential returns per unit of risk. Advance Auto Parts is currently generating about -0.04 per unit of risk. If you would invest  940.00  in 1 800 FLOWERSCOM on October 7, 2024 and sell it today you would lose (155.00) from holding 1 800 FLOWERSCOM or give up 16.49% of portfolio value over 90 days.

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

1 800 FLOWERSCOM  vs.  Advance Auto Parts

1 800 FLOWERSCOM

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in 1 800 FLOWERSCOM are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, 1 800 is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Advance Auto Parts

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Advance Auto Parts are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Advance Auto reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with 1 800 and Advance Auto

The main advantage of trading using opposite 1 800 and Advance Auto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 1 800 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.

The idea behind 1 800 FLOWERSCOM and Advance Auto Parts 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.