Correlation Between NI Holdings and Aterian

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

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

Diversification Opportunities for NI Holdings and Aterian

0.55

Correlation Coefficient

NI Holdings  Aterian

Very weak diversification

The 3 months correlation between NODK and Aterian is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding NI Holdings and Aterian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aterian and NI Holdings 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 NI Holdings 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 NI Holdings i.e., NI Holdings and Aterian go up and down completely randomly.

Pair Corralation between NI Holdings and Aterian

Given the investment horizon of 90 days NI Holdings is expected to under-perform the Aterian. But the stock apears to be less risky and, when comparing its historical volatility, NI Holdings is 2.96 times less risky than Aterian. The stock trades about -0.1 of its potential returns per unit of risk. The Aterian is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  218.00  in Aterian on December 19, 2024 and sell it today you would lose (7.00) from holding Aterian or give up 3.21% of portfolio value over 90 days.

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

NI Holdings  vs.  Aterian

NI Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days NI Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

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.

Pair Trading with NI Holdings and Aterian

The main advantage of trading using opposite NI Holdings and Aterian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NI Holdings 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 NI Holdings 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.