Correlation Between Bird Global and Aarons

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

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

Diversification Opportunities for Bird Global and Aarons

0.85

Correlation Coefficient

Bird Global  Aarons

Very poor diversification

The 3 months correlation between Bird and Aarons is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Bird Global and The Aarons in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aarons and Bird Global 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 Bird Global 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 Bird Global i.e., Bird Global and Aarons go up and down completely randomly.

Pair Corralation between Bird Global and Aarons

If you would invest  731.00  in The Aarons on January 20, 2024 and sell it today you would earn a total of  0.00  from holding The Aarons or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	4.55%
Values	Daily Returns

Bird Global  vs.  The Aarons

Bird Global

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Bird Global has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively weak fundamental indicators, Bird Global unveiled solid returns over the last few months and may actually be approaching a breakup point.

Aarons

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Aarons has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in May 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Bird Global and Aarons

The main advantage of trading using opposite Bird Global and Aarons positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bird Global 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.

The idea behind Bird Global and The Aarons 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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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.