Correlation Between ATT and Arena

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Can any of the company-specific risk be diversified away by investing in both ATT and Arena 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 Arena into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ATT Inc and The Arena Group, you can compare the effects of market volatilities on ATT and Arena 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 Arena. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATT and Arena.

Diversification Opportunities for ATT and Arena

0.34
  Correlation Coefficient

Weak diversification

The 3 months correlation between ATT and Arena is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and The Arena Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arena Group 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 Arena. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arena Group has no effect on the direction of ATT i.e., ATT and Arena go up and down completely randomly.

Pair Corralation between ATT and Arena

Taking into account the 90-day investment horizon ATT Inc is expected to generate 0.26 times more return on investment than Arena. However, ATT Inc is 3.88 times less risky than Arena. It trades about 0.27 of its potential returns per unit of risk. The Arena Group is currently generating about 0.04 per unit of risk. If you would invest  1,803  in ATT Inc on August 28, 2022 and sell it today you would earn a total of  109.00  from holding ATT Inc or generate 6.05% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

ATT Inc  vs.  The Arena Group

 Performance (%) 
       Timeline  
ATT Inc 
ATT Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in ATT Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, ATT may actually be approaching a critical reversion point that can send shares even higher in December 2022.

ATT Price Channel

Arena Group 
Arena Performance
9 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in The Arena Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite sluggish technical and fundamental indicators, Arena disclosed solid returns over the last few months and may actually be approaching a breakup point.

Arena Price Channel

ATT and Arena Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ATT and Arena

The main advantage of trading using opposite ATT and Arena positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATT position performs unexpectedly, Arena 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 Arena will offset losses from the drop in Arena's long position.
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The idea behind ATT Inc and The Arena Group 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

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