Correlation Between Deutsche Telekom and ATT
Can any of the company-specific risk be diversified away by investing in both Deutsche Telekom 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 Deutsche Telekom and ATT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Deutsche Telekom AG and ATT Inc, you can compare the effects of market volatilities on Deutsche Telekom 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 Deutsche Telekom with a short position of ATT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Telekom and ATT.
Diversification Opportunities for Deutsche Telekom and ATT
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Deutsche and ATT is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Telekom AG and ATT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATT Inc and Deutsche Telekom 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 Deutsche Telekom AG 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 Deutsche Telekom i.e., Deutsche Telekom and ATT go up and down completely randomly.
Pair Corralation between Deutsche Telekom and ATT
Assuming the 90 days trading horizon Deutsche Telekom AG is expected to generate 1.05 times more return on investment than ATT. However, Deutsche Telekom is 1.05 times more volatile than ATT Inc. It trades about 0.07 of its potential returns per unit of risk. ATT Inc is currently generating about 0.04 per unit of risk. If you would invest 1,877 in Deutsche Telekom AG on October 19, 2024 and sell it today you would earn a total of 1,083 from holding Deutsche Telekom AG or generate 57.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
Deutsche Telekom AG vs. ATT Inc
Performance |
| Timeline |
| Deutsche Telekom |
| ATT Inc |
Deutsche Telekom and ATT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Deutsche Telekom and ATT
The main advantage of trading using opposite Deutsche Telekom and ATT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deutsche Telekom 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.| Deutsche Telekom vs. T Mobile | Deutsche Telekom vs. Verizon Communications | Deutsche Telekom vs. ATT Inc | Deutsche Telekom vs. ATT Inc |
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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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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