Correlation Between Genuine Parts and Aarons Holdings

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

Diversification Opportunities for Genuine Parts and Aarons Holdings

0.36
  Correlation Coefficient

Weak diversification

The 24 months correlation between Genuine and Aarons is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Genuine Parts and Aarons Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aarons Holdings and Genuine Parts 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 Genuine Parts 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 Genuine Parts i.e., Genuine Parts and Aarons Holdings go up and down completely randomly.

Pair Corralation between Genuine Parts and Aarons Holdings

Considering the 90-day investment horizon Genuine Parts is expected to generate 0.33 times more return on investment than Aarons Holdings. However, Genuine Parts is 3.05 times less risky than Aarons Holdings. It trades about 0.33 of its potential returns per unit of risk. Aarons Holdings is currently generating about -0.06 per unit of risk. If you would invest  13,244  in Genuine Parts on May 15, 2022 and sell it today you would earn a total of  2,566  from holding Genuine Parts or generate 19.37% return on investment over 90 days.
Time Period24 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Genuine Parts  vs.  Aarons Holdings

 Performance (%) 
       Timeline  
Genuine Parts 
Genuine Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Genuine Parts are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting basic indicators, Genuine Parts may actually be approaching a critical reversion point that can send shares even higher in September 2022.

Genuine 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 latest stock price mess, may contribute to short-term losses for the institutional investors.

Aarons Price Channel

Genuine Parts and Aarons Holdings Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Genuine Parts and Aarons Holdings

The main advantage of trading using opposite Genuine Parts and Aarons Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genuine Parts 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.
The idea behind Genuine Parts 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.
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..

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