Correlation Between Ab Global and ATT

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Can any of the company-specific risk be diversified away by investing in both Ab Global and ATT 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 Ab Global and ATT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab Global E and ATT Inc, you can compare the effects of market volatilities on Ab Global and ATT 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 Ab Global with a short position of ATT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Global and ATT.

Diversification Opportunities for Ab Global and ATT

0.35
  Correlation Coefficient

Weak diversification

The 3 months correlation between GCEYX and ATT is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding AB GLOBAL E and ATT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATT Inc and Ab Global 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 Ab Global E are associated (or correlated) with ATT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATT Inc has no effect on the direction of Ab Global i.e., Ab Global and ATT go up and down completely randomly.

Pair Corralation between Ab Global and ATT

Assuming the 90 days horizon Ab Global is expected to generate 1.44 times less return on investment than ATT. But when comparing it to its historical volatility, Ab Global E is 1.73 times less risky than ATT. It trades about 0.25 of its potential returns per unit of risk. ATT Inc is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  1,683  in ATT Inc on December 29, 2023 and sell it today you would earn a total of  72.00  from holding ATT Inc or generate 4.28% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

AB GLOBAL E  vs.  ATT Inc

 Performance 
       Timeline  
Ab Global E 

Risk-Adjusted Performance

11 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Ab Global E are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Ab Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
ATT Inc 

Risk-Adjusted Performance

6 of 100

 
Low
 
High
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in ATT Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, ATT may actually be approaching a critical reversion point that can send shares even higher in April 2024.

Ab Global and ATT Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ab Global and ATT

The main advantage of trading using opposite Ab Global and ATT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Global position performs unexpectedly, ATT 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 ATT will offset losses from the drop in ATT's long position.
The idea behind Ab Global E and ATT Inc 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.

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