Correlation Between Gogo and ATT

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

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

Diversification Opportunities for Gogo and ATT

0.23

Correlation Coefficient

Gogo  ATT

Modest diversification

The 3 months correlation between Gogo and ATT is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Gogo Inc and ATT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATT Inc and Gogo 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 Gogo Inc 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 Gogo i.e., Gogo and ATT go up and down completely randomly.

Pair Corralation between Gogo and ATT

Given the investment horizon of 90 days Gogo Inc is expected to under-perform the ATT. In addition to that, Gogo is 8.02 times more volatile than ATT Inc. It trades about -0.01 of its total potential returns per unit of risk. ATT Inc is currently generating about 0.1 per unit of volatility. If you would invest  2,328  in ATT Inc on November 28, 2024 and sell it today you would earn a total of  58.00  from holding ATT Inc or generate 2.49% return on investment over 90 days.

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

Gogo Inc  vs.  ATT Inc

Gogo Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gogo Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Gogo is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

ATT Inc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ATT Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, ATT is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Gogo and ATT

The main advantage of trading using opposite Gogo and ATT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gogo 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 Gogo Inc 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.