Correlation Between ATT and Global X
Can any of the company-specific risk be diversified away by investing in both ATT and Global X 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 Global X into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ATT Inc and Global X E commerce, you can compare the effects of market volatilities on ATT and Global X 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 Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATT and Global X.
Diversification Opportunities for ATT and Global X
Poor diversification
The 3 months correlation between ATT and Global is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and Global X E commerce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X E 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 Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X E has no effect on the direction of ATT i.e., ATT and Global X go up and down completely randomly.
Pair Corralation between ATT and Global X
Taking into account the 90-day investment horizon ATT is expected to generate 1.01 times less return on investment than Global X. In addition to that, ATT is 1.02 times more volatile than Global X E commerce. It trades about 0.08 of its total potential returns per unit of risk. Global X E commerce is currently generating about 0.09 per unit of volatility. If you would invest 1,865 in Global X E commerce on October 24, 2024 and sell it today you would earn a total of 1,013 from holding Global X E commerce or generate 54.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.74% |
| Values | Daily Returns |
ATT Inc vs. Global X E commerce
Performance |
| Timeline |
| ATT Inc |
| Global X E |
ATT and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ATT and Global X
The main advantage of trading using opposite ATT and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATT position performs unexpectedly, Global X 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 Global X will offset losses from the drop in Global X's long position.The idea behind ATT Inc and Global X E commerce 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.| Global X vs. ProShares Online Retail | Global X vs. Amplify Online Retail | Global X vs. ProShares Long OnlineShort | Global X vs. Global X FinTech |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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