Correlation Between ATT and RBB Fund
Can any of the company-specific risk be diversified away by investing in both ATT and RBB Fund 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 RBB Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ATT Inc and The RBB Fund, you can compare the effects of market volatilities on ATT and RBB Fund 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 RBB Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATT and RBB Fund.
Diversification Opportunities for ATT and RBB Fund
Very poor diversification
The 3 months correlation between ATT and RBB is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and The RBB Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBB Fund 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 RBB Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RBB Fund has no effect on the direction of ATT i.e., ATT and RBB Fund go up and down completely randomly.
Pair Corralation between ATT and RBB Fund
Taking into account the 90-day investment horizon ATT Inc is expected to generate 1.4 times more return on investment than RBB Fund. However, ATT is 1.4 times more volatile than The RBB Fund. It trades about 0.18 of its potential returns per unit of risk. The RBB Fund is currently generating about 0.22 per unit of risk. If you would invest 1,752 in ATT Inc on September 1, 2024 and sell it today you would earn a total of 564.00 from holding ATT Inc or generate 32.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ATT Inc vs. The RBB Fund
Performance |
| Timeline |
| ATT Inc |
| RBB Fund |
ATT and RBB Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ATT and RBB Fund
The main advantage of trading using opposite ATT and RBB Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATT position performs unexpectedly, RBB Fund 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 RBB Fund will offset losses from the drop in RBB Fund's long position.The idea behind ATT Inc and The RBB Fund 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.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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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