Correlation Between Boston Properties and Aterian

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

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

Diversification Opportunities for Boston Properties and Aterian

-0.07

Correlation Coefficient

Boston Properties  Aterian

Good diversification

The 3 months correlation between Boston and Aterian is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Boston Properties and Aterian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aterian and Boston Properties 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 Boston Properties are associated (or correlated) with Aterian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aterian has no effect on the direction of Boston Properties i.e., Boston Properties and Aterian go up and down completely randomly.

Pair Corralation between Boston Properties and Aterian

Considering the 90-day investment horizon Boston Properties is expected to generate 0.41 times more return on investment than Aterian. However, Boston Properties is 2.45 times less risky than Aterian. It trades about 0.04 of its potential returns per unit of risk. Aterian is currently generating about -0.02 per unit of risk. If you would invest  6,075  in Boston Properties on September 14, 2024 and sell it today you would earn a total of  1,924  from holding Boston Properties or generate 31.67% return on investment over 90 days.

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

Boston Properties  vs.  Aterian

Boston Properties

Risk-Adjusted Performance

0 of 100

Weak

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

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.

Pair Trading with Boston Properties and Aterian

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

The idea behind Boston Properties and Aterian 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.