Correlation Between Alibaba Group and AutoZone
Can any of the company-specific risk be diversified away by investing in both Alibaba Group 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 Alibaba Group and AutoZone into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alibaba Group Holding and AutoZone, you can compare the effects of market volatilities on Alibaba Group 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 Alibaba Group with a short position of AutoZone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alibaba Group and AutoZone.
Diversification Opportunities for Alibaba Group and AutoZone
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Alibaba and AutoZone is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Alibaba Group Holding and AutoZone in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AutoZone and Alibaba Group 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 Alibaba Group Holding 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 Alibaba Group i.e., Alibaba Group and AutoZone go up and down completely randomly.
Pair Corralation between Alibaba Group and AutoZone
Given the investment horizon of 90 days Alibaba Group Holding is expected to under-perform the AutoZone. In addition to that, Alibaba Group is 2.23 times more volatile than AutoZone. It trades about -0.01 of its total potential returns per unit of risk. AutoZone is currently generating about 0.06 per unit of volatility. If you would invest 205,965 in AutoZone on January 20, 2024 and sell it today you would earn a total of 91,352 from holding AutoZone or generate 44.35% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 99.79% |
Values | Daily Returns |
Alibaba Group Holding vs. AutoZone
Performance |
Timeline |
Alibaba Group Holding |
AutoZone |
Alibaba Group and AutoZone Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Alibaba Group and AutoZone
The main advantage of trading using opposite Alibaba Group and AutoZone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alibaba Group 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.Alibaba Group vs. Shoe Carnival | Alibaba Group vs. Hibbett Sports | Alibaba Group vs. Citi Trends | Alibaba Group vs. Zumiez Inc |
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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