Correlation Between Advance Auto and INITECH

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

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

Diversification Opportunities for Advance Auto and INITECH

0.0

Correlation Coefficient

Advance Auto  INITECH

Pay attention - limited upside

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

Pair Corralation between Advance Auto and INITECH

If you would invest (100.00) in INITECH Co on March 14, 2024 and sell it today you would earn a total of  100.00  from holding INITECH Co 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

Advance Auto Parts  vs.  INITECH Co

Advance Auto Parts

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Advance Auto Parts has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in July 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

INITECH

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days INITECH Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, INITECH is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Advance Auto and INITECH

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

The idea behind Advance Auto Parts and INITECH Co 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.