Correlation Between Autozone and Aarons Holdings

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

Diversification Opportunities for Autozone and Aarons Holdings

0.33
  Correlation Coefficient

Weak diversification

The 24 months correlation between Autozone and Aarons is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Autozone and Aarons Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aarons Holdings and Autozone 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 Autozone 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 Autozone i.e., Autozone and Aarons Holdings go up and down completely randomly.

Pair Corralation between Autozone and Aarons Holdings

Considering the 90-day investment horizon Autozone is expected to under-perform the Aarons Holdings. In addition to that, Autozone is 1.08 times more volatile than Aarons Holdings. It trades about -0.28 of its total potential returns per unit of risk. Aarons Holdings is currently generating about -0.19 per unit of volatility. If you would invest  2,105  in Aarons Holdings on February 20, 2022 and sell it today you would lose (288.00)  from holding Aarons Holdings or give up 13.68% of portfolio value over 90 days.
Time Period24 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Autozone  vs.  Aarons Holdings

 Performance (%) 
      Timeline 
Autozone 
Autozone Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Autozone are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Autozone may actually be approaching a critical reversion point that can send shares even higher in June 2022.

Autozone 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 quite persistent basic indicators, Aarons Holdings is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Aarons Price Channel

Autozone and Aarons Holdings Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Autozone and Aarons Holdings

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

Autozone

Pair trading matchups for Autozone

The idea behind Autozone 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

Pair trading matchups for Aarons Holdings

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 Watchlist Optimization module to optimize watchlists to build efficient portfolio or rebalance existing positions based on mean-variance optimization algorithm.

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