Correlation Between Aarons and CarMax
Can any of the company-specific risk be diversified away by investing in both Aarons and CarMax 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 Aarons and CarMax into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Aarons and CarMax Inc, you can compare the effects of market volatilities on Aarons and CarMax 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 Aarons with a short position of CarMax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aarons and CarMax.
Diversification Opportunities for Aarons and CarMax
Good diversification
The 3 months correlation between Aarons and CarMax is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding The Aarons and CarMax Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CarMax Inc and Aarons 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 Aarons are associated (or correlated) with CarMax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CarMax Inc has no effect on the direction of Aarons i.e., Aarons and CarMax go up and down completely randomly.
Pair Corralation between Aarons and CarMax
Considering the 90-day investment horizon The Aarons is expected to under-perform the CarMax. In addition to that, Aarons is 1.36 times more volatile than CarMax Inc. It trades about -0.02 of its total potential returns per unit of risk. CarMax Inc is currently generating about 0.06 per unit of volatility. If you would invest 6,416 in CarMax Inc on February 21, 2024 and sell it today you would earn a total of 841.00 from holding CarMax Inc or generate 13.11% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
The Aarons vs. CarMax Inc
Performance |
Timeline |
Aarons |
CarMax Inc |
Aarons and CarMax Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Aarons and CarMax
The main advantage of trading using opposite Aarons and CarMax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aarons position performs unexpectedly, CarMax 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 CarMax will offset losses from the drop in CarMax's long position.Aarons vs. Custom Truck One | Aarons vs. PROG Holdings | Aarons vs. McGrath RentCorp | Aarons vs. HE Equipment Services |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
Other Complementary Tools
Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
Equity Valuation Check real value of public entities based on technical and fundamental data | |
Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios |