Correlation Between Ross Stores and AutoZone

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

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

Diversification Opportunities for Ross Stores and AutoZone

-0.86

Correlation Coefficient

Ross Stores  AutoZone

Pay attention - limited upside

The 3 months correlation between Ross and AutoZone is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Ross Stores and AutoZone in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AutoZone and Ross Stores 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 Ross Stores 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 Ross Stores i.e., Ross Stores and AutoZone go up and down completely randomly.

Pair Corralation between Ross Stores and AutoZone

Given the investment horizon of 90 days Ross Stores is expected to under-perform the AutoZone. In addition to that, Ross Stores is 1.16 times more volatile than AutoZone. It trades about -0.18 of its total potential returns per unit of risk. AutoZone is currently generating about 0.25 per unit of volatility. If you would invest  318,571  in AutoZone on December 28, 2024 and sell it today you would earn a total of  64,240  from holding AutoZone or generate 20.17% return on investment over 90 days.

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

Ross Stores  vs.  AutoZone

Ross Stores

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ross Stores has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

AutoZone

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AutoZone are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, AutoZone displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ross Stores and AutoZone

The main advantage of trading using opposite Ross Stores and AutoZone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ross Stores 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 Ross Stores 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.