Correlation Between Atlas Air and Aarons

Can any of the company-specific risk be diversified away by investing in both Atlas Air 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 Atlas Air and Aarons into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Atlas Air Worldwide and Aarons Inc, you can compare the effects of market volatilities on Atlas Air 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 Atlas Air with a short position of Aarons. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atlas Air and Aarons.

Diversification Opportunities for Atlas Air and Aarons

0.5

Correlation Coefficient

Atlas Air Aarons

Very weak diversification

The 3 months correlation between Atlas and Aarons is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Atlas Air Worldwide and Aarons Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aarons Inc and Atlas Air 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 Atlas Air Worldwide 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 Atlas Air i.e., Atlas Air and Aarons go up and down completely randomly.

Pair Corralation between Atlas Air and Aarons

Given the investment horizon of 90 days Atlas Air Worldwide is expected to generate 0.52 times more return on investment than Aarons. However, Atlas Air Worldwide is 1.92 times less risky than Aarons. It trades about 0.06 of its potential returns per unit of risk. Aarons Inc is currently generating about -0.04 per unit of risk. If you would invest  6,421  in Atlas Air Worldwide on December 27, 2022 and sell it today you would earn a total of  3,827  from holding Atlas Air Worldwide or generate 59.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.2%
Values	Daily Returns

Atlas Air Worldwide  vs.  Aarons Inc

Atlas Air Worldwide

Atlas Performance

4 of 100

Compared to the overall equity markets, risk-adjusted returns on investments in Atlas Air Worldwide are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Atlas Air is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Aarons Inc

Aarons Performance

0 of 100

Over the last 90 days Aarons Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2023. The recent disarray may also be a sign of long period up-swing for the firm insiders.

Pair Trading with Atlas Air and Aarons

The main advantage of trading using opposite Atlas Air and Aarons positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atlas Air 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 Atlas Air Worldwide 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 Piotroski F Score module to get Piotroski F Score based on binary analysis strategy of nine different fundamentals.