Correlation Between AutoZone and Acorn International

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

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

Diversification Opportunities for AutoZone and Acorn International

0.0

Correlation Coefficient

AutoZone  Acorn International

Pay attention - limited upside

The 3 months correlation between AutoZone and Acorn is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding AutoZone and Acorn International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acorn International and AutoZone 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 AutoZone are associated (or correlated) with Acorn International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acorn International has no effect on the direction of AutoZone i.e., AutoZone and Acorn International go up and down completely randomly.

Pair Corralation between AutoZone and Acorn International

If you would invest (100.00) in Acorn International on January 27, 2024 and sell it today you would earn a total of  100.00  from holding Acorn International or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

AutoZone  vs.  Acorn International

AutoZone

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AutoZone are ranked lower than 5 (%) 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 current stock price disarray, may contribute to short-term losses for the investors.

Acorn International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Acorn International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Acorn International is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with AutoZone and Acorn International

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

The idea behind AutoZone and Acorn International 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.