Correlation Between Aaon and Bed Bath

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

Diversification Opportunities for Aaon and Bed Bath

0.67
  Correlation Coefficient

Poor diversification

The 3 months correlation between Aaon and Bed Bath is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Aaon Inc and Bed Bath Beyond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bed Bath Beyond and Aaon 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 Aaon Inc are associated (or correlated) with Bed Bath. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bed Bath Beyond has no effect on the direction of Aaon i.e., Aaon and Bed Bath go up and down completely randomly.

Pair Corralation between Aaon and Bed Bath

Given the investment horizon of 90 days Aaon Inc is expected to generate 0.28 times more return on investment than Bed Bath. However, Aaon Inc is 3.56 times less risky than Bed Bath. It trades about -0.12 of its potential returns per unit of risk. Bed Bath Beyond is currently generating about -0.35 per unit of risk. If you would invest  5,790  in Aaon Inc on July 1, 2022 and sell it today you would lose (356.00)  from holding Aaon Inc or give up 6.15% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Aaon Inc  vs.  Bed Bath Beyond

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

Aaon Price Channel

Bed Bath Beyond 
Bed Bath Performance
7 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Bed Bath Beyond are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental drivers, Bed Bath showed solid returns over the last few months and may actually be approaching a breakup point.

Bed Bath Price Channel

Aaon and Bed Bath Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Aaon and Bed Bath

The main advantage of trading using opposite Aaon and Bed Bath positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aaon position performs unexpectedly, Bed Bath 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 Bed Bath will offset losses from the drop in Bed Bath's long position.
Aaon vs. Amazon Inc
The idea behind Aaon Inc and Bed Bath Beyond 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.
Bed Bath 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.

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