Correlation Between ATT and Cable One
Can any of the company-specific risk be diversified away by investing in both ATT and Cable One 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 Cable One into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ATT Inc and Cable One, you can compare the effects of market volatilities on ATT and Cable One 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 Cable One. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATT and Cable One.
Diversification Opportunities for ATT and Cable One
Very weak diversification
The 3 months correlation between ATT and Cable is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and Cable One in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cable One 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 Cable One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cable One has no effect on the direction of ATT i.e., ATT and Cable One go up and down completely randomly.
Pair Corralation between ATT and Cable One
Assuming the 90 days trading horizon ATT is expected to generate 2.53 times less return on investment than Cable One. But when comparing it to its historical volatility, ATT Inc is 1.47 times less risky than Cable One. It trades about 0.26 of its potential returns per unit of risk. Cable One is currently generating about 0.44 of returns per unit of risk over similar time horizon. If you would invest 982.00 in Cable One on August 25, 2024 and sell it today you would earn a total of 191.00 from holding Cable One or generate 19.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ATT Inc vs. Cable One
Performance |
| Timeline |
| ATT Inc |
| Cable One |
ATT and Cable One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ATT and Cable One
The main advantage of trading using opposite ATT and Cable One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATT position performs unexpectedly, Cable One 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 Cable One will offset losses from the drop in Cable One's long position.| ATT vs. Metalrgica Riosulense SA | ATT vs. GP Investments | ATT vs. New Oriental Education | ATT vs. Technos SA |
| Cable One vs. American Airlines Group | Cable One vs. Metalrgica Riosulense SA | Cable One vs. Charter Communications | Cable One vs. Zoom Video Communications |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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