Correlation Between OReilly Automotive and EBay

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

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

Diversification Opportunities for OReilly Automotive and EBay

0.0

Correlation Coefficient

OReilly Automotive  EBay

Pay attention - limited upside

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

Pair Corralation between OReilly Automotive and EBay

If you would invest (100.00) in EBay Inc NT on February 13, 2024 and sell it today you would earn a total of  100.00  from holding EBay Inc NT 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

OReilly Automotive  vs.  EBay Inc NT

OReilly Automotive

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days OReilly Automotive has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong essential indicators, OReilly Automotive is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

EBay Inc NT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EBay Inc NT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, EBay is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with OReilly Automotive and EBay

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

The idea behind OReilly Automotive and EBay Inc NT 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.