Correlation Between ATT and Charlottes Web

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

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

Diversification Opportunities for ATT and Charlottes Web

-0.52

Correlation Coefficient

ATT  Charlottes Web

Excellent diversification

The 3 months correlation between ATT and Charlottes is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and Charlottes Web Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charlottes Web Holdings 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 Charlottes Web. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charlottes Web Holdings has no effect on the direction of ATT i.e., ATT and Charlottes Web go up and down completely randomly.

Pair Corralation between ATT and Charlottes Web

Taking into account the 90-day investment horizon ATT Inc is expected to generate 0.25 times more return on investment than Charlottes Web. However, ATT Inc is 4.05 times less risky than Charlottes Web. It trades about 0.26 of its potential returns per unit of risk. Charlottes Web Holdings is currently generating about 0.05 per unit of risk. If you would invest  2,232  in ATT Inc on December 28, 2024 and sell it today you would earn a total of  586.00  from holding ATT Inc or generate 26.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

ATT Inc  vs.  Charlottes Web Holdings

ATT Inc

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ATT Inc are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, ATT unveiled solid returns over the last few months and may actually be approaching a breakup point.

Charlottes Web Holdings

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Charlottes Web Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical indicators, Charlottes Web reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ATT and Charlottes Web

The main advantage of trading using opposite ATT and Charlottes Web positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATT position performs unexpectedly, Charlottes Web 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 Charlottes Web will offset losses from the drop in Charlottes Web's long position.

The idea behind ATT Inc and Charlottes Web Holdings 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.