Correlation Between Custom Truck and Aarons
Can any of the company-specific risk be diversified away by investing in both Custom Truck 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 Custom Truck and Aarons into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Custom Truck One and The Aarons, you can compare the effects of market volatilities on Custom Truck 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 Custom Truck with a short position of Aarons. Check out your portfolio center. Please also check ongoing floating volatility patterns of Custom Truck and Aarons.
Diversification Opportunities for Custom Truck and Aarons
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Custom and Aarons is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Custom Truck One and The Aarons in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aarons and Custom Truck 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 Custom Truck One 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 Custom Truck i.e., Custom Truck and Aarons go up and down completely randomly.
Pair Corralation between Custom Truck and Aarons
Given the investment horizon of 90 days Custom Truck is expected to generate 3.01 times less return on investment than Aarons. But when comparing it to its historical volatility, Custom Truck One is 1.22 times less risky than Aarons. It trades about 0.01 of its potential returns per unit of risk. The Aarons is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,085 in The Aarons on August 28, 2024 and sell it today you would lose (76.00) from holding The Aarons or give up 7.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 92.73% |
| Values | Daily Returns |
Custom Truck One vs. The Aarons
Performance |
| Timeline |
| Custom Truck One |
| Aarons |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
Custom Truck and Aarons Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Custom Truck and Aarons
The main advantage of trading using opposite Custom Truck and Aarons positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Custom Truck 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.| Custom Truck vs. PROG Holdings | Custom Truck vs. McGrath RentCorp | Custom Truck vs. Mega Matrix Corp | Custom Truck vs. FTAI Aviation Ltd |
| 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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