Correlation Between GameStop Corp and AutoZone

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

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

Diversification Opportunities for GameStop Corp and AutoZone

-0.7

Correlation Coefficient

GameStop Corp  AutoZone

Excellent diversification

The 3 months correlation between GameStop and AutoZone is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding GameStop Corp and AutoZone in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AutoZone and GameStop Corp 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 GameStop Corp 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 GameStop Corp i.e., GameStop Corp and AutoZone go up and down completely randomly.

Pair Corralation between GameStop Corp and AutoZone

Assuming the 90 days trading horizon GameStop Corp is expected to under-perform the AutoZone. In addition to that, GameStop Corp is 2.9 times more volatile than AutoZone. It trades about -0.16 of its total potential returns per unit of risk. AutoZone is currently generating about 0.12 per unit of volatility. If you would invest  316,400  in AutoZone on December 31, 2024 and sell it today you would earn a total of  29,900  from holding AutoZone or generate 9.45% return on investment over 90 days.

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

GameStop Corp  vs.  AutoZone

GameStop Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days GameStop Corp 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 May 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 9 (%) 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 May 2025.

Pair Trading with GameStop Corp and AutoZone

The main advantage of trading using opposite GameStop Corp and AutoZone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GameStop Corp 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 GameStop Corp 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.