Correlation Between FlexShopper and Aarons

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

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

Diversification Opportunities for FlexShopper and Aarons

0.72

Correlation Coefficient

FlexShopper  Aarons

Poor diversification

The 3 months correlation between FlexShopper and Aarons is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding FlexShopper and The Aarons in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aarons and FlexShopper 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 FlexShopper 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 FlexShopper i.e., FlexShopper and Aarons go up and down completely randomly.

Pair Corralation between FlexShopper and Aarons

Given the investment horizon of 90 days FlexShopper is expected to generate 11.88 times more return on investment than Aarons. However, FlexShopper is 11.88 times more volatile than The Aarons. It trades about 0.26 of its potential returns per unit of risk. The Aarons is currently generating about 0.26 per unit of risk. If you would invest  107.00  in FlexShopper on September 4, 2024 and sell it today you would earn a total of  111.00  from holding FlexShopper or generate 103.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	35.94%
Values	Daily Returns

FlexShopper  vs.  The Aarons

FlexShopper

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in FlexShopper are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, FlexShopper showed solid returns over the last few months and may actually be approaching a breakup point.

Aarons

Risk-Adjusted Performance

0 of 100

Solid

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 uncertain basic indicators, Aarons may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with FlexShopper and Aarons

The main advantage of trading using opposite FlexShopper and Aarons positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FlexShopper 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 FlexShopper 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 CEOs Directory module to screen CEOs from public companies around the world.