Correlation Between OReilly Automotive and Zebra Technologies

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

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

Diversification Opportunities for OReilly Automotive and Zebra Technologies

0.88

Correlation Coefficient

OReilly Automotive  Zebra Technologies

Very poor diversification

The 3 months correlation between OReilly and Zebra is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding OReilly Automotive and Zebra Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zebra Technologies and OReilly Automotive 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 OReilly Automotive are associated (or correlated) with Zebra Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zebra Technologies has no effect on the direction of OReilly Automotive i.e., OReilly Automotive and Zebra Technologies go up and down completely randomly.

Pair Corralation between OReilly Automotive and Zebra Technologies

Assuming the 90 days trading horizon OReilly Automotive is expected to under-perform the Zebra Technologies. But the stock apears to be less risky and, when comparing its historical volatility, OReilly Automotive is 1.24 times less risky than Zebra Technologies. The stock trades about -0.21 of its potential returns per unit of risk. The Zebra Technologies is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  8,200  in Zebra Technologies on October 23, 2024 and sell it today you would lose (125.00) from holding Zebra Technologies or give up 1.52% of portfolio value over 90 days.

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

OReilly Automotive  vs.  Zebra Technologies

OReilly Automotive

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in OReilly Automotive are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong essential indicators, OReilly Automotive is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Zebra Technologies

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Zebra Technologies are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Zebra Technologies sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with OReilly Automotive and Zebra Technologies

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

The idea behind OReilly Automotive and Zebra Technologies 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.