Correlation Between Outbrain and ATT

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

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

Diversification Opportunities for Outbrain and ATT

-0.75

Correlation Coefficient

Outbrain  ATT

Pay attention - limited upside

The 3 months correlation between Outbrain and ATT is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Outbrain and ATT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATT Inc and Outbrain 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 Outbrain 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 Outbrain i.e., Outbrain and ATT go up and down completely randomly.

Pair Corralation between Outbrain and ATT

Allowing for the 90-day total investment horizon Outbrain is expected to generate 4.43 times more return on investment than ATT. However, Outbrain is 4.43 times more volatile than ATT Inc. It trades about 0.49 of its potential returns per unit of risk. ATT Inc is currently generating about -0.18 per unit of risk. If you would invest  496.00  in Outbrain on September 12, 2024 and sell it today you would earn a total of  169.00  from holding Outbrain or generate 34.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Outbrain  vs.  ATT Inc

Outbrain

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Outbrain are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent fundamental drivers, Outbrain sustained solid returns over the last few months and may actually be approaching a breakup point.

ATT Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ATT Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, ATT is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Outbrain and ATT

The main advantage of trading using opposite Outbrain and ATT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Outbrain 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 Outbrain 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.