Correlation Between NRG Energy and Aterian
Can any of the company-specific risk be diversified away by investing in both NRG Energy 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 NRG Energy and Aterian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NRG Energy and Aterian, you can compare the effects of market volatilities on NRG Energy 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 NRG Energy with a short position of Aterian. Check out your portfolio center. Please also check ongoing floating volatility patterns of NRG Energy and Aterian.
Diversification Opportunities for NRG Energy and Aterian
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between NRG and Aterian is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding NRG Energy and Aterian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aterian and NRG Energy 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 NRG Energy 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 NRG Energy i.e., NRG Energy and Aterian go up and down completely randomly.
Pair Corralation between NRG Energy and Aterian
Considering the 90-day investment horizon NRG Energy is expected to generate 0.35 times more return on investment than Aterian. However, NRG Energy is 2.9 times less risky than Aterian. It trades about 0.13 of its potential returns per unit of risk. Aterian is currently generating about -0.02 per unit of risk. If you would invest 3,063 in NRG Energy on September 2, 2024 and sell it today you would earn a total of 7,098 from holding NRG Energy or generate 231.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NRG Energy vs. Aterian
Performance |
| Timeline |
| NRG Energy |
| Aterian |
NRG Energy and Aterian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NRG Energy and Aterian
The main advantage of trading using opposite NRG Energy and Aterian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NRG Energy 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.| NRG Energy vs. TransAlta Corp | NRG Energy vs. Kenon Holdings | NRG Energy vs. Pampa Energia SA | NRG Energy vs. AGL Energy |
| Aterian vs. Energy Focu | Aterian vs. Flexsteel Industries | Aterian vs. Ethan Allen Interiors | Aterian vs. FGI 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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