Correlation Between Wahed FTSE and ATT
Can any of the company-specific risk be diversified away by investing in both Wahed FTSE 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 Wahed FTSE and ATT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wahed FTSE USA and ATT Inc, you can compare the effects of market volatilities on Wahed FTSE 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 Wahed FTSE with a short position of ATT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wahed FTSE and ATT.
Diversification Opportunities for Wahed FTSE and ATT
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Wahed and ATT is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Wahed FTSE USA and ATT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATT Inc and Wahed FTSE 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 Wahed FTSE USA 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 Wahed FTSE i.e., Wahed FTSE and ATT go up and down completely randomly.
Pair Corralation between Wahed FTSE and ATT
Given the investment horizon of 90 days Wahed FTSE USA is expected to under-perform the ATT. But the etf apears to be less risky and, when comparing its historical volatility, Wahed FTSE USA is 1.23 times less risky than ATT. The etf trades about -0.16 of its potential returns per unit of risk. The ATT Inc is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest 1,684 in ATT Inc on January 24, 2024 and sell it today you would lose (34.00) from holding ATT Inc or give up 2.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wahed FTSE USA vs. ATT Inc
Performance |
| Timeline |
| Wahed FTSE USA |
| ATT Inc |
Wahed FTSE and ATT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wahed FTSE and ATT
The main advantage of trading using opposite Wahed FTSE and ATT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wahed FTSE 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 Wahed FTSE USA 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.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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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