Correlation Between Aarons and JJill

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

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

Diversification Opportunities for Aarons and JJill

-0.37

Correlation Coefficient

Aarons  JJill

Very good diversification

The 3 months correlation between Aarons and JJill is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding The Aarons and JJill Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JJill Inc 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 JJill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JJill Inc has no effect on the direction of Aarons i.e., Aarons and JJill go up and down completely randomly.

Pair Corralation between Aarons and JJill

Considering the 90-day investment horizon The Aarons is expected to under-perform the JJill. In addition to that, Aarons is 1.4 times more volatile than JJill Inc. It trades about -0.03 of its total potential returns per unit of risk. JJill Inc is currently generating about 0.04 per unit of volatility. If you would invest  1,825  in JJill Inc on February 6, 2024 and sell it today you would earn a total of  929.00  from holding JJill Inc or generate 50.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

The Aarons  vs.  JJill Inc

Aarons

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Aarons has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in June 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

JJill Inc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in JJill Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating essential indicators, JJill disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aarons and JJill

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

The idea behind The Aarons and JJill Inc 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.