Correlation Between Aterian and IB Acquisition

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

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

Diversification Opportunities for Aterian and IB Acquisition

-0.69

Correlation Coefficient

Aterian  IB Acquisition

Excellent diversification

The 3 months correlation between Aterian and IBAC is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Aterian and IB Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IB Acquisition Corp and Aterian 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 Aterian are associated (or correlated) with IB Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IB Acquisition Corp has no effect on the direction of Aterian i.e., Aterian and IB Acquisition go up and down completely randomly.

Pair Corralation between Aterian and IB Acquisition

Given the investment horizon of 90 days Aterian is expected to under-perform the IB Acquisition. In addition to that, Aterian is 21.64 times more volatile than IB Acquisition Corp. It trades about -0.11 of its total potential returns per unit of risk. IB Acquisition Corp is currently generating about 0.13 per unit of volatility. If you would invest  1,009  in IB Acquisition Corp on September 16, 2024 and sell it today you would earn a total of  4.00  from holding IB Acquisition Corp or generate 0.4% return on investment over 90 days.

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

Aterian  vs.  IB Acquisition Corp

Aterian

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aterian has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

IB Acquisition Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in IB Acquisition Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, IB Acquisition is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Aterian and IB Acquisition

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

The idea behind Aterian and IB Acquisition Corp 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 Transaction History module to view history of all your transactions and understand their impact on performance.