Correlation Between Haverty Furniture and Aarons

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

Diversification Opportunities for Haverty Furniture and Aarons

0.31
  Correlation Coefficient

Weak diversification

The 3 months correlation between Haverty and Aarons is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Haverty Furniture Companies and Aarons Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aarons Inc and Haverty Furniture 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 Haverty Furniture Companies are associated (or correlated) with Aarons. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aarons Inc has no effect on the direction of Haverty Furniture i.e., Haverty Furniture and Aarons go up and down completely randomly.

Pair Corralation between Haverty Furniture and Aarons

Considering the 90-day investment horizon Haverty Furniture Companies is expected to generate 0.73 times more return on investment than Aarons. However, Haverty Furniture Companies is 1.38 times less risky than Aarons. It trades about 0.04 of its potential returns per unit of risk. Aarons Inc is currently generating about 0.0 per unit of risk. If you would invest  2,231  in Haverty Furniture Companies on September 2, 2022 and sell it today you would earn a total of  918.00  from holding Haverty Furniture Companies or generate 41.15% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Haverty Furniture Companies  vs.  Aarons Inc

 Performance (%) 
       Timeline  
Haverty Furniture 
Haverty Performance
11 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Haverty Furniture Companies are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Haverty Furniture unveiled solid returns over the last few months and may actually be approaching a breakup point.

Haverty Price Channel

Aarons Inc 
Aarons Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Aarons Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite sluggish basic indicators, Aarons may actually be approaching a critical reversion point that can send shares even higher in January 2023.

Aarons Price Channel

Haverty Furniture and Aarons Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Haverty Furniture and Aarons

The main advantage of trading using opposite Haverty Furniture and Aarons positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Haverty Furniture position performs unexpectedly, Aarons 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 will offset losses from the drop in Aarons' long position.
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The idea behind Haverty Furniture Companies and Aarons Inc 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 Analyst Recommendations module to analyst recommendations and target price estimates broken down by several categories.

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