Correlation Between ATAI Life and IDEX

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Can any of the company-specific risk be diversified away by investing in both ATAI Life and IDEX 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 IDEX 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 IDEX Corporation, you can compare the effects of market volatilities on ATAI Life and IDEX 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 IDEX. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATAI Life and IDEX.

Diversification Opportunities for ATAI Life and IDEX

0.2
  Correlation Coefficient

Modest diversification

The 3 months correlation between ATAI and IDEX is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding ATAI Life Sciences and IDEX Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IDEX 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 IDEX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IDEX has no effect on the direction of ATAI Life i.e., ATAI Life and IDEX go up and down completely randomly.

Pair Corralation between ATAI Life and IDEX

Given the investment horizon of 90 days ATAI Life is expected to generate 3.02 times less return on investment than IDEX. In addition to that, ATAI Life is 6.62 times more volatile than IDEX Corporation. It trades about 0.01 of its total potential returns per unit of risk. IDEX Corporation is currently generating about 0.22 per unit of volatility. If you would invest  23,605  in IDEX Corporation on December 29, 2023 and sell it today you would earn a total of  904.00  from holding IDEX Corporation or generate 3.83% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy95.65%
ValuesDaily Returns

ATAI Life Sciences  vs.  IDEX Corp.

 Performance 
       Timeline  
ATAI Life Sciences 

Risk-Adjusted Performance

6 of 100

 
Low
 
High
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in ATAI Life Sciences are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, ATAI Life demonstrated solid returns over the last few months and may actually be approaching a breakup point.
IDEX 

Risk-Adjusted Performance

16 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in IDEX Corporation are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal technical and fundamental indicators, IDEX showed solid returns over the last few months and may actually be approaching a breakup point.

ATAI Life and IDEX Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ATAI Life and IDEX

The main advantage of trading using opposite ATAI Life and IDEX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATAI Life position performs unexpectedly, IDEX 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 IDEX will offset losses from the drop in IDEX's long position.
The idea behind ATAI Life Sciences and IDEX Corporation 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 Global Correlations module to find global opportunities by holding instruments from different markets.

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