Correlation Between Aterian and 256746AJ7

Can any of the company-specific risk be diversified away by investing in both Aterian and 256746AJ7 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 256746AJ7 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aterian and DLTR 265 01 DEC 31, you can compare the effects of market volatilities on Aterian and 256746AJ7 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 256746AJ7. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aterian and 256746AJ7.

Diversification Opportunities for Aterian and 256746AJ7

-0.39

Correlation Coefficient

Aterian  256746AJ7

Very good diversification

The 3 months correlation between Aterian and 256746AJ7 is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Aterian and DLTR 265 01 DEC 31 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DLTR 265 01 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 256746AJ7. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DLTR 265 01 has no effect on the direction of Aterian i.e., Aterian and 256746AJ7 go up and down completely randomly.

Pair Corralation between Aterian and 256746AJ7

Given the investment horizon of 90 days Aterian is expected to generate 7.06 times more return on investment than 256746AJ7. However, Aterian is 7.06 times more volatile than DLTR 265 01 DEC 31. It trades about 0.04 of its potential returns per unit of risk. DLTR 265 01 DEC 31 is currently generating about -0.07 per unit of risk. If you would invest  232.00  in Aterian on December 24, 2024 and sell it today you would earn a total of  11.00  from holding Aterian or generate 4.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Aterian  vs.  DLTR 265 01 DEC 31

Aterian

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aterian are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile technical and fundamental indicators, Aterian reported solid returns over the last few months and may actually be approaching a breakup point.

DLTR 265 01

Risk-Adjusted Performance

Very Weak

Over the last 90 days DLTR 265 01 DEC 31 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 256746AJ7 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Aterian and 256746AJ7

The main advantage of trading using opposite Aterian and 256746AJ7 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aterian position performs unexpectedly, 256746AJ7 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 256746AJ7 will offset losses from the drop in 256746AJ7's long position.

The idea behind Aterian and DLTR 265 01 DEC 31 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.