Correlation Between ATT and Strategy Shares

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

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

Diversification Opportunities for ATT and Strategy Shares

0.74

Correlation Coefficient

ATT  Strategy Shares

Poor diversification

The 3 months correlation between ATT and Strategy is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and Strategy Shares NewfoundReSolv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategy Shares Newf and ATT 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 ATT Inc are associated (or correlated) with Strategy Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategy Shares Newf has no effect on the direction of ATT i.e., ATT and Strategy Shares go up and down completely randomly.

Pair Corralation between ATT and Strategy Shares

Taking into account the 90-day investment horizon ATT is expected to generate 1.41 times less return on investment than Strategy Shares. In addition to that, ATT is 1.41 times more volatile than Strategy Shares NewfoundReSolve. It trades about 0.18 of its total potential returns per unit of risk. Strategy Shares NewfoundReSolve is currently generating about 0.35 per unit of volatility. If you would invest  3,105  in Strategy Shares NewfoundReSolve on September 4, 2024 and sell it today you would earn a total of  160.00  from holding Strategy Shares NewfoundReSolve or generate 5.15% return on investment over 90 days.

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

ATT Inc  vs.  Strategy Shares NewfoundReSolv

ATT Inc

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ATT Inc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, ATT may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Strategy Shares Newf

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Strategy Shares NewfoundReSolve are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Strategy Shares may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with ATT and Strategy Shares

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

The idea behind ATT Inc and Strategy Shares NewfoundReSolve 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.