Correlation Between Rite Aid and Aarons
Can any of the company-specific risk be diversified away by investing in both Rite Aid 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 Rite Aid and Aarons into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rite Aid and The Aarons, you can compare the effects of market volatilities on Rite Aid 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 Rite Aid with a short position of Aarons. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rite Aid and Aarons.
Diversification Opportunities for Rite Aid and Aarons
Poor diversification
The 3 months correlation between Rite and Aarons is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Rite Aid and The Aarons in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aarons and Rite Aid 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 Rite Aid 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 has no effect on the direction of Rite Aid i.e., Rite Aid and Aarons go up and down completely randomly.
Pair Corralation between Rite Aid and Aarons
If you would invest 699.00 in The Aarons on January 19, 2024 and sell it today you would earn a total of 19.00 from holding The Aarons or generate 2.72% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 4.55% |
Values | Daily Returns |
Rite Aid vs. The Aarons
Performance |
Timeline |
Rite Aid |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Aarons |
Rite Aid and Aarons Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Rite Aid and Aarons
The main advantage of trading using opposite Rite Aid and Aarons positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rite Aid 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.Rite Aid vs. PetMed Express | Rite Aid vs. High Tide | Rite Aid vs. China Jo Jo Drugstores | Rite Aid vs. Bimi International Medical |
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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 the Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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