Correlation Between Mohawk Industries and Aterian
Can any of the company-specific risk be diversified away by investing in both Mohawk Industries 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 Mohawk Industries and Aterian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mohawk Industries and Aterian, you can compare the effects of market volatilities on Mohawk Industries 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 Mohawk Industries with a short position of Aterian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mohawk Industries and Aterian.
Diversification Opportunities for Mohawk Industries and Aterian
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mohawk and Aterian is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Mohawk Industries and Aterian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aterian and Mohawk Industries 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 Mohawk Industries 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 Mohawk Industries i.e., Mohawk Industries and Aterian go up and down completely randomly.
Pair Corralation between Mohawk Industries and Aterian
Considering the 90-day investment horizon Mohawk Industries is expected to under-perform the Aterian. But the stock apears to be less risky and, when comparing its historical volatility, Mohawk Industries is 1.78 times less risky than Aterian. The stock trades about -0.19 of its potential returns per unit of risk. The Aterian is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest 262.00 in Aterian on October 26, 2024 and sell it today you would lose (34.00) from holding Aterian or give up 12.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mohawk Industries vs. Aterian
Performance |
| Timeline |
| Mohawk Industries |
| Aterian |
Mohawk Industries and Aterian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mohawk Industries and Aterian
The main advantage of trading using opposite Mohawk Industries and Aterian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mohawk Industries 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.| Mohawk Industries vs. Bassett Furniture Industries | Mohawk Industries vs. Ethan Allen Interiors | Mohawk Industries vs. Natuzzi SpA | Mohawk Industries vs. Flexsteel Industries |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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