Correlation Between Aterian and Boston Beer

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

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

Diversification Opportunities for Aterian and Boston Beer

-0.71

Correlation Coefficient

Aterian  Boston Beer

Pay attention - limited upside

The 3 months correlation between Aterian and Boston is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Aterian and Boston Beer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Beer 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 Boston Beer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boston Beer has no effect on the direction of Aterian i.e., Aterian and Boston Beer go up and down completely randomly.

Pair Corralation between Aterian and Boston Beer

Given the investment horizon of 90 days Aterian is expected to under-perform the Boston Beer. In addition to that, Aterian is 1.89 times more volatile than Boston Beer. It trades about -0.15 of its total potential returns per unit of risk. Boston Beer is currently generating about 0.14 per unit of volatility. If you would invest  27,637  in Boston Beer on September 17, 2024 and sell it today you would earn a total of  3,864  from holding Boston Beer or generate 13.98% return on investment over 90 days.

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

Aterian  vs.  Boston Beer

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.

Boston Beer

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Boston Beer are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Boston Beer displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aterian and Boston Beer

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

The idea behind Aterian and Boston Beer 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 Global Correlations module to find global opportunities by holding instruments from different markets.