Correlation Between Consolidated Communications and ATN International
Can any of the company-specific risk be diversified away by investing in both Consolidated Communications and ATN International 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 Consolidated Communications and ATN International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Consolidated Communications and ATN International, you can compare the effects of market volatilities on Consolidated Communications and ATN International 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 Consolidated Communications with a short position of ATN International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consolidated Communications and ATN International.
Diversification Opportunities for Consolidated Communications and ATN International
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Consolidated and ATN is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Consolidated Communications and ATN International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATN International and Consolidated Communications 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 Consolidated Communications are associated (or correlated) with ATN International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATN International has no effect on the direction of Consolidated Communications i.e., Consolidated Communications and ATN International go up and down completely randomly.
Pair Corralation between Consolidated Communications and ATN International
Given the investment horizon of 90 days Consolidated Communications is expected to generate 0.05 times more return on investment than ATN International. However, Consolidated Communications is 19.8 times less risky than ATN International. It trades about 0.87 of its potential returns per unit of risk. ATN International is currently generating about -0.06 per unit of risk. If you would invest 470.00 in Consolidated Communications on October 24, 2024 and sell it today you would earn a total of 2.00 from holding Consolidated Communications or generate 0.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 22.22% |
| Values | Daily Returns |
Consolidated Communications vs. ATN International
Performance |
| Timeline |
| Consolidated Communications |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
| ATN International |
Consolidated Communications and ATN International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Consolidated Communications and ATN International
The main advantage of trading using opposite Consolidated Communications and ATN International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consolidated Communications position performs unexpectedly, ATN International 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 ATN International will offset losses from the drop in ATN International's long position.The idea behind Consolidated Communications and ATN International 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 the Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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