Correlation Between Container Store and AutoZone

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

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

Diversification Opportunities for Container Store and AutoZone

-0.46

Correlation Coefficient

Container Store  AutoZone

Very good diversification

The 3 months correlation between Container and AutoZone is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Container Store Group and AutoZone in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AutoZone and Container Store 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 Container Store Group 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 Container Store i.e., Container Store and AutoZone go up and down completely randomly.

Pair Corralation between Container Store and AutoZone

Considering the 90-day investment horizon Container Store Group is expected to under-perform the AutoZone. In addition to that, Container Store is 3.08 times more volatile than AutoZone. It trades about -0.44 of its total potential returns per unit of risk. AutoZone is currently generating about -0.25 per unit of volatility. If you would invest  316,860  in AutoZone on January 31, 2024 and sell it today you would lose (16,982) from holding AutoZone or give up 5.36% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Container Store Group  vs.  AutoZone

Container Store Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Container Store Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in May 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

AutoZone

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AutoZone are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, AutoZone may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Container Store and AutoZone

The main advantage of trading using opposite Container Store and AutoZone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Container Store 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 Container Store Group 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.