Correlation Between Aterian and Whirlpool
Can any of the company-specific risk be diversified away by investing in both Aterian and Whirlpool 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 Whirlpool into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aterian and Whirlpool, you can compare the effects of market volatilities on Aterian and Whirlpool 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 Whirlpool. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aterian and Whirlpool.
Diversification Opportunities for Aterian and Whirlpool
Pay attention - limited upside
The 3 months correlation between Aterian and Whirlpool is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Aterian and Whirlpool in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whirlpool 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 Whirlpool. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Whirlpool has no effect on the direction of Aterian i.e., Aterian and Whirlpool go up and down completely randomly.
Pair Corralation between Aterian and Whirlpool
Given the investment horizon of 90 days Aterian is expected to generate 1.8 times less return on investment than Whirlpool. In addition to that, Aterian is 2.29 times more volatile than Whirlpool. It trades about 0.1 of its total potential returns per unit of risk. Whirlpool is currently generating about 0.43 per unit of volatility. If you would invest 11,399 in Whirlpool on October 20, 2024 and sell it today you would earn a total of 1,602 from holding Whirlpool or generate 14.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aterian vs. Whirlpool
Performance |
| Timeline |
| Aterian |
| Whirlpool |
Aterian and Whirlpool Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aterian and Whirlpool
The main advantage of trading using opposite Aterian and Whirlpool positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aterian position performs unexpectedly, Whirlpool 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 Whirlpool will offset losses from the drop in Whirlpool's long position.The idea behind Aterian and Whirlpool 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.| Whirlpool vs. Ethan Allen Interiors | Whirlpool vs. Mohawk Industries | Whirlpool vs. Tempur Sealy International | Whirlpool vs. MillerKnoll |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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