Correlation Between ATT and GB Sciences
Can any of the company-specific risk be diversified away by investing in both ATT and GB Sciences 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 GB Sciences into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ATT Inc and GB Sciences, you can compare the effects of market volatilities on ATT and GB Sciences 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 GB Sciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATT and GB Sciences.
Diversification Opportunities for ATT and GB Sciences
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between ATT and GBLX is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and GB Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GB Sciences 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 GB Sciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GB Sciences has no effect on the direction of ATT i.e., ATT and GB Sciences go up and down completely randomly.
Pair Corralation between ATT and GB Sciences
Taking into account the 90-day investment horizon ATT is expected to generate 42.46 times less return on investment than GB Sciences. But when comparing it to its historical volatility, ATT Inc is 49.97 times less risky than GB Sciences. It trades about 0.2 of its potential returns per unit of risk. GB Sciences is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 0.01 in GB Sciences on August 30, 2024 and sell it today you would earn a total of 0.00 from holding GB Sciences or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
ATT Inc vs. GB Sciences
Performance |
| Timeline |
| ATT Inc |
| GB Sciences |
ATT and GB Sciences Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ATT and GB Sciences
The main advantage of trading using opposite ATT and GB Sciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATT position performs unexpectedly, GB Sciences 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 GB Sciences will offset losses from the drop in GB Sciences' long position.The idea behind ATT Inc and GB Sciences 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.| GB Sciences vs. Antibe Therapeutics | GB Sciences vs. Awakn Life Sciences | GB Sciences vs. America Great Health | GB Sciences vs. Therasense |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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