Correlation Between Brill Shoe and Aran Research

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

By analyzing existing cross correlation between Brill Shoe Industries and Aran Research and, you can compare the effects of market volatilities on Brill Shoe and Aran Research 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 Brill Shoe with a short position of Aran Research. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brill Shoe and Aran Research.

Diversification Opportunities for Brill Shoe and Aran Research

0.31

Correlation Coefficient

Brill Shoe  Aran Research

Weak diversification

The 3 months correlation between Brill and Aran is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Brill Shoe Industries and Aran Research and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aran Research and Brill Shoe 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 Brill Shoe Industries are associated (or correlated) with Aran Research. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aran Research has no effect on the direction of Brill Shoe i.e., Brill Shoe and Aran Research go up and down completely randomly.

Pair Corralation between Brill Shoe and Aran Research

Assuming the 90 days trading horizon Brill Shoe Industries is expected to under-perform the Aran Research. In addition to that, Brill Shoe is 1.53 times more volatile than Aran Research and. It trades about -0.07 of its total potential returns per unit of risk. Aran Research and is currently generating about -0.03 per unit of volatility. If you would invest  197,600  in Aran Research and on December 29, 2024 and sell it today you would lose (9,700) from holding Aran Research and or give up 4.91% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Brill Shoe Industries  vs.  Aran Research and

Brill Shoe Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Brill Shoe Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Aran Research

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aran Research and has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Aran Research is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Brill Shoe and Aran Research

The main advantage of trading using opposite Brill Shoe and Aran Research positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brill Shoe position performs unexpectedly, Aran Research 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 Aran Research will offset losses from the drop in Aran Research's long position.

The idea behind Brill Shoe Industries and Aran Research and 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.

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 Bonds Directory module to find actively traded corporate debentures issued by US companies.