Correlation Between Four Leaf and ATT

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

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

Diversification Opportunities for Four Leaf and ATT

0.84

Correlation Coefficient

Four Leaf  ATT

Very poor diversification

The 3 months correlation between Four and ATT is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Four Leaf Acquisition and ATT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATT Inc and Four Leaf 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 Four Leaf Acquisition 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 Four Leaf i.e., Four Leaf and ATT go up and down completely randomly.

Pair Corralation between Four Leaf and ATT

Assuming the 90 days horizon Four Leaf is expected to generate 9.57 times less return on investment than ATT. But when comparing it to its historical volatility, Four Leaf Acquisition is 6.79 times less risky than ATT. It trades about 0.09 of its potential returns per unit of risk. ATT Inc is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1,266  in ATT Inc on June 9, 2024 and sell it today you would earn a total of  831.00  from holding ATT Inc or generate 65.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.66%
Values	Daily Returns

Four Leaf Acquisition  vs.  ATT Inc

Four Leaf Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Four Leaf Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's essential indicators remain comparatively stable which may send shares a bit higher in October 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

ATT Inc

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ATT Inc are ranked lower than 17 (%) 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.

Pair Trading with Four Leaf and ATT

The main advantage of trading using opposite Four Leaf and ATT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Four Leaf 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 Four Leaf Acquisition 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.