Correlation Between Aterian and Whirlpool

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

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

Diversification Opportunities for Aterian and Whirlpool

0.27

Correlation Coefficient

Aterian  Whirlpool

Modest diversification

The 3 months correlation between Aterian and Whirlpool is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Aterian and Whirlpool in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whirlpool 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 Whirlpool. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Whirlpool has no effect on the direction of Aterian i.e., Aterian and Whirlpool go up and down completely randomly.

Pair Corralation between Aterian and Whirlpool

Given the investment horizon of 90 days Aterian is expected to generate 2.1 times more return on investment than Whirlpool. However, Aterian is 2.1 times more volatile than Whirlpool. It trades about 0.0 of its potential returns per unit of risk. Whirlpool is currently generating about -0.1 per unit of risk. If you would invest  255.00  in Aterian on December 29, 2024 and sell it today you would lose (25.00) from holding Aterian or give up 9.8% of portfolio value over 90 days.

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

Aterian  vs.  Whirlpool

Aterian

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aterian has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, Aterian is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Whirlpool

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Aterian and Whirlpool

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

The idea behind Aterian and Whirlpool 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.