Correlation Between Western Magnesium and ATT
Can any of the company-specific risk be diversified away by investing in both Western Magnesium 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 Western Magnesium and ATT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Magnesium and ATT Inc, you can compare the effects of market volatilities on Western Magnesium 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 Western Magnesium with a short position of ATT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Magnesium and ATT.
Diversification Opportunities for Western Magnesium and ATT
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Western and ATT is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Western Magnesium and ATT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATT Inc and Western Magnesium 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 Western Magnesium 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 Western Magnesium i.e., Western Magnesium and ATT go up and down completely randomly.
Pair Corralation between Western Magnesium and ATT
Given the investment horizon of 90 days Western Magnesium is expected to under-perform the ATT. In addition to that, Western Magnesium is 5.78 times more volatile than ATT Inc. It trades about -0.09 of its total potential returns per unit of risk. ATT Inc is currently generating about 0.13 per unit of volatility. If you would invest 1,610 in ATT Inc on September 2, 2024 and sell it today you would earn a total of 706.00 from holding ATT Inc or generate 43.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Western Magnesium vs. ATT Inc
Performance |
| Timeline |
| Western Magnesium |
| ATT Inc |
Western Magnesium and ATT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Magnesium and ATT
The main advantage of trading using opposite Western Magnesium and ATT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Magnesium 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.| Western Magnesium vs. ATT Inc | Western Magnesium vs. Merck Company | Western Magnesium vs. Walt Disney | Western Magnesium vs. Caterpillar |
Check out your portfolio center.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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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