Correlation Between Ark Restaurants and Aarons Holdings

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

Diversification Opportunities for Ark Restaurants and Aarons Holdings

0.3
  Correlation Coefficient

Weak diversification

The 3 months correlation between Ark Restaurants and Aarons is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Ark Restaurants Cp and Aarons Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aarons Holdings and Ark Restaurants 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 Ark Restaurants Cp are associated (or correlated) with Aarons Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aarons Holdings has no effect on the direction of Ark Restaurants i.e., Ark Restaurants and Aarons Holdings go up and down completely randomly.

Pair Corralation between Ark Restaurants and Aarons Holdings

Given the investment horizon of 90 days Ark Restaurants Cp is expected to generate 0.84 times more return on investment than Aarons Holdings. However, Ark Restaurants Cp is 1.2 times less risky than Aarons Holdings. It trades about 0.13 of its potential returns per unit of risk. Aarons Holdings is currently generating about -0.15 per unit of risk. If you would invest  1,811  in Ark Restaurants Cp on July 7, 2022 and sell it today you would earn a total of  127.00  from holding Ark Restaurants Cp or generate 7.01% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy95.45%
ValuesDaily Returns

Ark Restaurants Cp  vs.  Aarons Holdings

 Performance (%) 
       Timeline  
Ark Restaurants Cp 
Ark Restaurants Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Ark Restaurants Cp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable forward-looking signals, Ark Restaurants is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Ark Restaurants Price Channel

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

Ark Restaurants and Aarons Holdings Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ark Restaurants and Aarons Holdings

The main advantage of trading using opposite Ark Restaurants and Aarons Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ark Restaurants position performs unexpectedly, Aarons Holdings 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 Aarons Holdings will offset losses from the drop in Aarons Holdings' long position.
Ark Restaurants vs. Amazon Inc
The idea behind Ark Restaurants Cp and Aarons 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.
Aarons Holdings vs. Amazon Inc
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.

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