Correlation Between Vodka Brands and Aterian

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

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

Diversification Opportunities for Vodka Brands and Aterian

-0.5

Correlation Coefficient

Vodka Brands  Aterian

Very good diversification

The 3 months correlation between Vodka and Aterian is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Vodka Brands Corp and Aterian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aterian and Vodka Brands 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 Vodka Brands Corp 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 Vodka Brands i.e., Vodka Brands and Aterian go up and down completely randomly.

Pair Corralation between Vodka Brands and Aterian

Given the investment horizon of 90 days Vodka Brands Corp is expected to under-perform the Aterian. But the pink sheet apears to be less risky and, when comparing its historical volatility, Vodka Brands Corp is 3.75 times less risky than Aterian. The pink sheet trades about -0.22 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  256.00  in Aterian on October 9, 2024 and sell it today you would lose (2.00) from holding Aterian or give up 0.78% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

Vodka Brands Corp  vs.  Aterian

Vodka Brands Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vodka Brands Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward-looking signals, Vodka Brands is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the 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 latest fragile 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 Vodka Brands and Aterian

The main advantage of trading using opposite Vodka Brands and Aterian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vodka Brands 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 Vodka Brands Corp 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.