Correlation Between Aarons Holdings and Autozone

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Can any of the company-specific risk be diversified away by investing in both Aarons Holdings 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 Aarons Holdings and Autozone into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aarons Holdings and Autozone, you can compare the effects of market volatilities on Aarons Holdings 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 Aarons Holdings with a short position of Autozone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aarons Holdings and Autozone.

Diversification Opportunities for Aarons Holdings and Autozone

0.06
  Correlation Coefficient

Significant diversification

The 3 months correlation between Aarons and Autozone is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Aarons Holdings and Autozone in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autozone and Aarons Holdings 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 Aarons Holdings 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 Aarons Holdings i.e., Aarons Holdings and Autozone go up and down completely randomly.

Pair Corralation between Aarons Holdings and Autozone

Considering the 90-day investment horizon Aarons Holdings is expected to generate 0.94 times more return on investment than Autozone. However, Aarons Holdings is 1.06 times less risky than Autozone. It trades about -0.16 of its potential returns per unit of risk. Autozone is currently generating about -0.28 per unit of risk. If you would invest  2,053  in Aarons Holdings on February 22, 2022 and sell it today you would lose (236.00)  from holding Aarons Holdings or give up 11.5% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Aarons Holdings  vs.  Autozone

 Performance (%) 
      Timeline 
Aarons Holdings 
Aarons Performance
0 of 100
Over the last 90 days Aarons Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Aarons Price Channel

Autozone 
Autozone Performance
0 of 100
Over the last 90 days Autozone has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Autozone is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Autozone Price Channel

Aarons Holdings and Autozone Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Aarons Holdings and Autozone

The main advantage of trading using opposite Aarons Holdings and Autozone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aarons Holdings 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.

Aarons Holdings

Pair trading matchups for Aarons Holdings

The idea behind Aarons Holdings and Autozone 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.
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.

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