Correlation Between Macys and Aterian

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

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

Diversification Opportunities for Macys and Aterian

-0.47

Correlation Coefficient

Macys  Aterian

Very good diversification

The 3 months correlation between Macys and Aterian is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Macys Inc and Aterian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aterian and Macys 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 Macys Inc 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 Macys i.e., Macys and Aterian go up and down completely randomly.

Pair Corralation between Macys and Aterian

Taking into account the 90-day investment horizon Macys Inc is expected to generate 0.54 times more return on investment than Aterian. However, Macys Inc is 1.84 times less risky than Aterian. It trades about 0.0 of its potential returns per unit of risk. Aterian is currently generating about -0.04 per unit of risk. If you would invest  2,109  in Macys Inc on October 8, 2024 and sell it today you would lose (427.00) from holding Macys Inc or give up 20.25% of portfolio value over 90 days.

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

Macys Inc  vs.  Aterian

Macys Inc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Macys Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Macys displayed solid returns over the last few months and may actually be approaching a breakup point.

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 latest weak performance, the Stock's technical and fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Macys and Aterian

The main advantage of trading using opposite Macys and Aterian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macys 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 Macys Inc 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.