Correlation Between US Global and ATT

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

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

Diversification Opportunities for US Global and ATT

-0.02

Correlation Coefficient

US Global  ATT

Good diversification

The 3 months correlation between GROW and ATT is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding US Global Investors and ATT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATT Inc and US Global 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 US Global Investors 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 US Global i.e., US Global and ATT go up and down completely randomly.

Pair Corralation between US Global and ATT

Given the investment horizon of 90 days US Global Investors is expected to generate 1.28 times more return on investment than ATT. However, US Global is 1.28 times more volatile than ATT Inc. It trades about 0.01 of its potential returns per unit of risk. ATT Inc is currently generating about -0.08 per unit of risk. If you would invest  243.00  in US Global Investors on October 24, 2024 and sell it today you would earn a total of  0.00  from holding US Global Investors or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

US Global Investors  vs.  ATT Inc

US Global Investors

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days US Global Investors has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, US Global is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

ATT Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ATT Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, ATT is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with US Global and ATT

The main advantage of trading using opposite US Global and ATT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Global 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 US Global Investors 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.