Correlation Between Aterian and Freeport

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

By analyzing existing cross correlation between Aterian and Freeport McMoRan 54 percent, you can compare the effects of market volatilities on Aterian and Freeport 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 Freeport. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aterian and Freeport.

Diversification Opportunities for Aterian and Freeport

0.58

Correlation Coefficient

Aterian  Freeport

Very weak diversification

The 3 months correlation between Aterian and Freeport is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Aterian and Freeport McMoRan 54 percent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freeport McMoRan 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 Freeport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freeport McMoRan has no effect on the direction of Aterian i.e., Aterian and Freeport go up and down completely randomly.

Pair Corralation between Aterian and Freeport

Given the investment horizon of 90 days Aterian is expected to under-perform the Freeport. In addition to that, Aterian is 6.49 times more volatile than Freeport McMoRan 54 percent. It trades about -0.29 of its total potential returns per unit of risk. Freeport McMoRan 54 percent is currently generating about -0.39 per unit of volatility. If you would invest  10,131  in Freeport McMoRan 54 percent on September 25, 2024 and sell it today you would lose (318.00) from holding Freeport McMoRan 54 percent or give up 3.14% of portfolio value over 90 days.

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

Aterian  vs.  Freeport McMoRan 54 percent

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 weak 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.

Freeport McMoRan

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Freeport McMoRan 54 percent has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Freeport 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 Freeport

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

The idea behind Aterian and Freeport McMoRan 54 percent 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 Commodity Directory module to find actively traded commodities issued by global exchanges.