Correlation Between Aterian and Sunedison
Can any of the company-specific risk be diversified away by investing in both Aterian and Sunedison 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 Aterian and Sunedison into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aterian and Sunedison, you can compare the effects of market volatilities on Aterian and Sunedison 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 Aterian with a short position of Sunedison. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aterian and Sunedison.
Diversification Opportunities for Aterian and Sunedison
Poor diversification
The 3 months correlation between Aterian and Sunedison is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Aterian and Sunedison in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunedison and Aterian 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 Aterian are associated (or correlated) with Sunedison. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunedison has no effect on the direction of Aterian i.e., Aterian and Sunedison go up and down completely randomly.
Pair Corralation between Aterian and Sunedison
Given the investment horizon of 90 days Aterian is expected to generate 0.35 times more return on investment than Sunedison. However, Aterian is 2.84 times less risky than Sunedison. It trades about -0.02 of its potential returns per unit of risk. Sunedison is currently generating about -0.06 per unit of risk. If you would invest 434.00 in Aterian on September 15, 2024 and sell it today you would lose (197.00) from holding Aterian or give up 45.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.63% |
| Values | Daily Returns |
Aterian vs. Sunedison
Performance |
| Timeline |
| Aterian |
| Sunedison |
Aterian and Sunedison Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aterian and Sunedison
The main advantage of trading using opposite Aterian and Sunedison positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aterian position performs unexpectedly, Sunedison 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 Sunedison will offset losses from the drop in Sunedison's long position.| Aterian vs. Flexsteel Industries | Aterian vs. Hamilton Beach Brands | Aterian vs. Natuzzi SpA | Aterian vs. Crown Crafts |
| Sunedison vs. United Fire Group | Sunedison vs. Pekin Life Insurance | Sunedison vs. Aterian | Sunedison vs. Old Dominion Freight |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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