Correlation Between Atai Life and Erie Indemnity

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Can any of the company-specific risk be diversified away by investing in both Atai Life and Erie Indemnity 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 Atai Life and Erie Indemnity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Atai Life Sciences and Erie Indemnity, you can compare the effects of market volatilities on Atai Life and Erie Indemnity 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 Atai Life with a short position of Erie Indemnity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atai Life and Erie Indemnity.

Diversification Opportunities for Atai Life and Erie Indemnity

-0.18
  Correlation Coefficient

Good diversification

The 18 months correlation between Atai Life and Erie Indemnity is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Atai Life Sciences and Erie Indemnity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Erie Indemnity and Atai Life 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 Atai Life Sciences are associated (or correlated) with Erie Indemnity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Erie Indemnity has no effect on the direction of Atai Life i.e., Atai Life and Erie Indemnity go up and down completely randomly.

Pair Corralation between Atai Life and Erie Indemnity

Given the investment horizon of 90 days Atai Life Sciences is expected to under-perform the Erie Indemnity. In addition to that, Atai Life is 3.12 times more volatile than Erie Indemnity. It trades about -0.09 of its total potential returns per unit of risk. Erie Indemnity is currently generating about 0.01 per unit of volatility. If you would invest  22,292  in Erie Indemnity on July 2, 2022 and sell it today you would lose (297.00)  from holding Erie Indemnity or give up 1.33% of portfolio value over 90 days.
Time Period18 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy65.39%
ValuesDaily Returns

Atai Life Sciences  vs.  Erie Indemnity

 Performance (%) 
       Timeline  
Atai Life Sciences 
Atai Life Performance
0 of 100
Over the last 90 days Atai Life Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in October 2022. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Atai Life Price Channel

Erie Indemnity 
Erie Indemnity Performance
0 of 100
Over the last 90 days Erie Indemnity has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, Erie Indemnity is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Erie Indemnity Price Channel

Atai Life and Erie Indemnity Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Atai Life and Erie Indemnity

The main advantage of trading using opposite Atai Life and Erie Indemnity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atai Life position performs unexpectedly, Erie Indemnity 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 Erie Indemnity will offset losses from the drop in Erie Indemnity's long position.
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The idea behind Atai Life Sciences and Erie Indemnity 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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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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.

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