Correlation Between Textainer Group and Aarons

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Can any of the company-specific risk be diversified away by investing in both Textainer Group 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 Textainer Group and Aarons into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Textainer Group Holdings and The Aarons, you can compare the effects of market volatilities on Textainer Group 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 Textainer Group with a short position of Aarons. Check out your portfolio center. Please also check ongoing floating volatility patterns of Textainer Group and Aarons.

Diversification Opportunities for Textainer Group and Aarons

0.76
  Correlation Coefficient

Poor diversification

The 3 months correlation between Textainer and Aarons is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Textainer Group Holdings and The Aarons in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aarons and Textainer Group 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 Textainer Group Holdings 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 Textainer Group i.e., Textainer Group and Aarons go up and down completely randomly.

Pair Corralation between Textainer Group and Aarons

If you would invest  1,009  in The Aarons on September 18, 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 Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Textainer Group Holdings  vs.  The Aarons

 Performance 
       Timeline  
Textainer Group Holdings 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Textainer Group Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, Textainer Group is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.
Aarons 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Modest
Over the last 90 days The Aarons has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Aarons is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Textainer Group and Aarons Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Textainer Group and Aarons

The main advantage of trading using opposite Textainer Group and Aarons positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Textainer Group 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 Textainer Group Holdings 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 Stocks Directory module to find actively traded stocks across global markets.

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