Correlation Between Aarons and McGrath RentCorp
Can any of the company-specific risk be diversified away by investing in both Aarons and McGrath RentCorp 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 McGrath RentCorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Aarons and McGrath RentCorp, you can compare the effects of market volatilities on Aarons and McGrath RentCorp 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 McGrath RentCorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aarons and McGrath RentCorp.
Diversification Opportunities for Aarons and McGrath RentCorp
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aarons and McGrath is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding The Aarons and McGrath RentCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on McGrath RentCorp 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 McGrath RentCorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of McGrath RentCorp has no effect on the direction of Aarons i.e., Aarons and McGrath RentCorp go up and down completely randomly.
Pair Corralation between Aarons and McGrath RentCorp
If you would invest 11,515 in McGrath RentCorp on August 27, 2024 and sell it today you would earn a total of 575.00 from holding McGrath RentCorp or generate 4.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 4.76% |
| Values | Daily Returns |
The Aarons vs. McGrath RentCorp
Performance |
| Timeline |
| Aarons |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
| McGrath RentCorp |
Aarons and McGrath RentCorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aarons and McGrath RentCorp
The main advantage of trading using opposite Aarons and McGrath RentCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aarons position performs unexpectedly, McGrath RentCorp 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 McGrath RentCorp will offset losses from the drop in McGrath RentCorp's long position.| Aarons vs. Custom Truck One | Aarons vs. PROG Holdings | Aarons vs. McGrath RentCorp | Aarons vs. HE Equipment Services |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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