Correlation Between ATT and Medical Marijuana
Can any of the company-specific risk be diversified away by investing in both ATT and Medical Marijuana 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 Medical Marijuana into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ATT Inc and Medical Marijuana I, you can compare the effects of market volatilities on ATT and Medical Marijuana 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 Medical Marijuana. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATT and Medical Marijuana.
Diversification Opportunities for ATT and Medical Marijuana
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between ATT and Medical is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and Medical Marijuana I in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medical Marijuana 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 Medical Marijuana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medical Marijuana has no effect on the direction of ATT i.e., ATT and Medical Marijuana go up and down completely randomly.
Pair Corralation between ATT and Medical Marijuana
Taking into account the 90-day investment horizon ATT Inc is expected to generate 0.08 times more return on investment than Medical Marijuana. However, ATT Inc is 12.63 times less risky than Medical Marijuana. It trades about 0.22 of its potential returns per unit of risk. Medical Marijuana I is currently generating about -0.07 per unit of risk. If you would invest 2,211 in ATT Inc on August 29, 2024 and sell it today you would earn a total of 116.00 from holding ATT Inc or generate 5.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ATT Inc vs. Medical Marijuana I
Performance |
| Timeline |
| ATT Inc |
| Medical Marijuana |
ATT and Medical Marijuana Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ATT and Medical Marijuana
The main advantage of trading using opposite ATT and Medical Marijuana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATT position performs unexpectedly, Medical Marijuana 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 Medical Marijuana will offset losses from the drop in Medical Marijuana's long position.The idea behind ATT Inc and Medical Marijuana I 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.| Medical Marijuana vs. American Green | Medical Marijuana vs. North American Cannabis | Medical Marijuana vs. Marijuana | Medical Marijuana vs. Rimrock Gold Corp |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
Other Complementary Tools
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities |