Correlation Between Aterian and Sphere 3D

Can any of the company-specific risk be diversified away by investing in both Aterian and Sphere 3D 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 Sphere 3D into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aterian and Sphere 3D Corp, you can compare the effects of market volatilities on Aterian and Sphere 3D 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 Sphere 3D. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aterian and Sphere 3D.

Diversification Opportunities for Aterian and Sphere 3D

-0.38

Correlation Coefficient

Aterian  Sphere 3D

Very good diversification

The 3 months correlation between Aterian and Sphere is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Aterian and Sphere 3D Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sphere 3D Corp 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 Sphere 3D. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sphere 3D Corp has no effect on the direction of Aterian i.e., Aterian and Sphere 3D go up and down completely randomly.

Pair Corralation between Aterian and Sphere 3D

Given the investment horizon of 90 days Aterian is expected to under-perform the Sphere 3D. But the stock apears to be less risky and, when comparing its historical volatility, Aterian is 1.41 times less risky than Sphere 3D. The stock trades about -0.02 of its potential returns per unit of risk. The Sphere 3D Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  196.00  in Sphere 3D Corp on September 24, 2024 and sell it today you would lose (96.00) from holding Sphere 3D Corp or give up 48.98% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Aterian  vs.  Sphere 3D Corp

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 weak performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Sphere 3D Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sphere 3D Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Sphere 3D showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aterian and Sphere 3D

The main advantage of trading using opposite Aterian and Sphere 3D positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aterian position performs unexpectedly, Sphere 3D 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 Sphere 3D will offset losses from the drop in Sphere 3D's long position.

The idea behind Aterian and Sphere 3D Corp 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.