Correlation Between Global X and ATT

Can any of the company-specific risk be diversified away by investing in both Global X 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 Global X and ATT into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Global X Funds and ATT Inc, you can compare the effects of market volatilities on Global X 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 Global X with a short position of ATT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and ATT.

Diversification Opportunities for Global X and ATT

0.95

Correlation Coefficient

Global X  ATT

Almost no diversification

The 3 months correlation between Global and ATT is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Global X Funds and ATT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATT Inc and Global X 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 Global X Funds 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 Global X i.e., Global X and ATT go up and down completely randomly.

Pair Corralation between Global X and ATT

Assuming the 90 days trading horizon Global X is expected to generate 1.23 times less return on investment than ATT. But when comparing it to its historical volatility, Global X Funds is 1.05 times less risky than ATT. It trades about 0.14 of its potential returns per unit of risk. ATT Inc is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  3,918  in ATT Inc on September 22, 2024 and sell it today you would earn a total of  697.00  from holding ATT Inc or generate 17.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Global X Funds  vs.  ATT Inc

Global X Funds

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Funds are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Global X sustained solid returns over the last few months and may actually be approaching a breakup point.

ATT Inc

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ATT Inc are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, ATT sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Global X and ATT

The main advantage of trading using opposite Global X and ATT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X 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.

The idea behind Global X Funds and ATT Inc 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.

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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.