Correlation Between Aarons Holdings and National Vision

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

Diversification Opportunities for Aarons Holdings and National Vision

-0.33
  Correlation Coefficient

Very good diversification

The 3 months correlation between Aarons and National is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Aarons Holdings and National Vision Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Vision Holdings 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 National Vision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Vision Holdings has no effect on the direction of Aarons Holdings i.e., Aarons Holdings and National Vision go up and down completely randomly.

Pair Corralation between Aarons Holdings and National Vision

Considering the 90-day investment horizon Aarons Holdings is expected to under-perform the National Vision. In addition to that, Aarons Holdings is 1.55 times more volatile than National Vision Holdings. It trades about -0.05 of its total potential returns per unit of risk. National Vision Holdings is currently generating about 0.0 per unit of volatility. If you would invest  4,124  in National Vision Holdings on July 9, 2022 and sell it today you would lose (687.00)  from holding National Vision Holdings or give up 16.66% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy99.8%
ValuesDaily Returns

Aarons Holdings  vs.  National Vision Holdings

 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 conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in November 2022. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Aarons Price Channel

National Vision Holdings 
National Performance
9 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in National Vision Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, National Vision exhibited solid returns over the last few months and may actually be approaching a breakup point.

National Price Channel

Aarons Holdings and National Vision Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Aarons Holdings and National Vision

The main advantage of trading using opposite Aarons Holdings and National Vision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aarons Holdings position performs unexpectedly, National Vision 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 National Vision will offset losses from the drop in National Vision's long position.
Aarons Holdings vs. Amazon Inc
The idea behind Aarons Holdings and National Vision Holdings 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.
National Vision vs. Best Buy Company
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.

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