Correlation Between Energy Focu and Aterian

Can any of the company-specific risk be diversified away by investing in both Energy Focu 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 Energy Focu and Aterian into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Energy Focu and Aterian, you can compare the effects of market volatilities on Energy Focu 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 Energy Focu with a short position of Aterian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy Focu and Aterian.

Diversification Opportunities for Energy Focu and Aterian

0.3

Correlation Coefficient

Energy Focu  Aterian

Weak diversification

The 3 months correlation between Energy and Aterian is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Energy Focu and Aterian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aterian and Energy Focu 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 Energy Focu 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 Energy Focu i.e., Energy Focu and Aterian go up and down completely randomly.

Pair Corralation between Energy Focu and Aterian

Given the investment horizon of 90 days Energy Focu is expected to generate 0.64 times more return on investment than Aterian. However, Energy Focu is 1.56 times less risky than Aterian. It trades about 0.11 of its potential returns per unit of risk. Aterian is currently generating about 0.0 per unit of risk. If you would invest  148.00  in Energy Focu on February 4, 2024 and sell it today you would earn a total of  11.00  from holding Energy Focu or generate 7.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Energy Focu  vs.  Aterian

Energy Focu

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Energy Focu are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, Energy Focu demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Aterian

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aterian has generated negative risk-adjusted returns adding no value to investors with long positions. Even with conflicting performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in June 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Energy Focu and Aterian

The main advantage of trading using opposite Energy Focu and Aterian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energy Focu 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.

The idea behind Energy Focu and Aterian 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.

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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.