Correlation Between American Woodmark and Aterian
Can any of the company-specific risk be diversified away by investing in both American Woodmark 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 American Woodmark and Aterian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Woodmark and Aterian, you can compare the effects of market volatilities on American Woodmark 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 American Woodmark with a short position of Aterian. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Woodmark and Aterian.
Diversification Opportunities for American Woodmark and Aterian
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and Aterian is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding American Woodmark and Aterian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aterian and American Woodmark 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 American Woodmark 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 American Woodmark i.e., American Woodmark and Aterian go up and down completely randomly.
Pair Corralation between American Woodmark and Aterian
Given the investment horizon of 90 days American Woodmark is expected to generate 0.75 times more return on investment than Aterian. However, American Woodmark is 1.32 times less risky than Aterian. It trades about 0.01 of its potential returns per unit of risk. Aterian is currently generating about -0.03 per unit of risk. If you would invest 8,961 in American Woodmark on August 30, 2024 and sell it today you would lose (42.00) from holding American Woodmark or give up 0.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Woodmark vs. Aterian
Performance |
| Timeline |
| American Woodmark |
| Aterian |
American Woodmark and Aterian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Woodmark and Aterian
The main advantage of trading using opposite American Woodmark and Aterian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Woodmark 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.| American Woodmark vs. La Z Boy Incorporated | American Woodmark vs. Natuzzi SpA | American Woodmark vs. Mohawk Industries | American Woodmark vs. MasterBrand |
Check out your portfolio center.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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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