Correlation Between Original Bark and Aarons Holdings

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

Diversification Opportunities for Original Bark and Aarons Holdings

-0.35
  Correlation Coefficient

Very good diversification

The 3 months correlation between Original and Aarons is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding The Original Bark and Aarons Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aarons Holdings and Original Bark 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 The Original Bark 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 Original Bark i.e., Original Bark and Aarons Holdings go up and down completely randomly.

Pair Corralation between Original Bark and Aarons Holdings

Given the investment horizon of 90 days The Original Bark is expected to under-perform the Aarons Holdings. In addition to that, Original Bark is 1.16 times more volatile than Aarons Holdings. It trades about -0.06 of its total potential returns per unit of risk. Aarons Holdings is currently generating about -0.05 per unit of volatility. If you would invest  5,744  in Aarons Holdings on June 27, 2022 and sell it today you would lose (4,664)  from holding Aarons Holdings or give up 81.2% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy89.36%
ValuesDaily Returns

The Original Bark  vs.  Aarons Holdings

 Performance (%) 
       Timeline  
Original Bark 
Original Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in The Original Bark are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Original Bark demonstrated solid returns over the last few months and may actually be approaching a breakup point.

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

Aarons Price Channel

Original Bark and Aarons Holdings Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Original Bark and Aarons Holdings

The main advantage of trading using opposite Original Bark and Aarons Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Original Bark 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.
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The idea behind The Original Bark 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.
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.

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