Correlation Between Advance Auto and MarineMax

Can any of the company-specific risk be diversified away by investing in both Advance Auto and MarineMax 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 MarineMax 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 MarineMax, you can compare the effects of market volatilities on Advance Auto and MarineMax 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 MarineMax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advance Auto and MarineMax.

Diversification Opportunities for Advance Auto and MarineMax

0.34

Correlation Coefficient

Advance Auto  MarineMax

Weak diversification

The 3 months correlation between Advance and MarineMax is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Advance Auto Parts and MarineMax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MarineMax 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 MarineMax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MarineMax has no effect on the direction of Advance Auto i.e., Advance Auto and MarineMax go up and down completely randomly.

Pair Corralation between Advance Auto and MarineMax

Considering the 90-day investment horizon Advance Auto is expected to generate 3.94 times less return on investment than MarineMax. But when comparing it to its historical volatility, Advance Auto Parts is 1.18 times less risky than MarineMax. It trades about 0.01 of its potential returns per unit of risk. MarineMax is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  3,172  in MarineMax on August 30, 2024 and sell it today you would earn a total of  80.00  from holding MarineMax or generate 2.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Advance Auto Parts  vs.  MarineMax

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 relatively invariable basic indicators, Advance Auto is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

MarineMax

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MarineMax are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, MarineMax may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Advance Auto and MarineMax

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

The idea behind Advance Auto Parts and MarineMax 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.