Correlation Between Guess and OReilly Automotive
Can any of the company-specific risk be diversified away by investing in both Guess and OReilly Automotive 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 Guess and OReilly Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guess Inc and OReilly Automotive, you can compare the effects of market volatilities on Guess and OReilly Automotive 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 Guess with a short position of OReilly Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guess and OReilly Automotive.
Diversification Opportunities for Guess and OReilly Automotive
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Guess and OReilly is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Guess Inc and OReilly Automotive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OReilly Automotive and Guess 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 Guess Inc are associated (or correlated) with OReilly Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OReilly Automotive has no effect on the direction of Guess i.e., Guess and OReilly Automotive go up and down completely randomly.
Pair Corralation between Guess and OReilly Automotive
Considering the 90-day investment horizon Guess Inc is expected to generate 2.18 times more return on investment than OReilly Automotive. However, Guess is 2.18 times more volatile than OReilly Automotive. It trades about 0.11 of its potential returns per unit of risk. OReilly Automotive is currently generating about 0.08 per unit of risk. If you would invest 1,147 in Guess Inc on April 25, 2025 and sell it today you would earn a total of 211.00 from holding Guess Inc or generate 18.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guess Inc vs. OReilly Automotive
Performance |
| Timeline |
| Guess Inc |
| OReilly Automotive |
Guess and OReilly Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guess and OReilly Automotive
The main advantage of trading using opposite Guess and OReilly Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guess position performs unexpectedly, OReilly Automotive 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 OReilly Automotive will offset losses from the drop in OReilly Automotive's long position.The idea behind Guess Inc and OReilly Automotive 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.| OReilly Automotive vs. Advance Auto Parts | OReilly Automotive vs. AutoZone | OReilly Automotive vs. Dollar Tree | OReilly Automotive vs. Five Below |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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