Correlation Between Mutual Of and ATT
Can any of the company-specific risk be diversified away by investing in both Mutual Of 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 Mutual Of and ATT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mutual Of America and ATT Inc, you can compare the effects of market volatilities on Mutual Of 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 Mutual Of with a short position of ATT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mutual Of and ATT.
Diversification Opportunities for Mutual Of and ATT
Good diversification
The 3 months correlation between Mutual and ATT is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Mutual Of America and ATT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATT Inc and Mutual Of 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 Mutual Of America 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 Mutual Of i.e., Mutual Of and ATT go up and down completely randomly.
Pair Corralation between Mutual Of and ATT
Assuming the 90 days horizon Mutual Of is expected to generate 4.03 times less return on investment than ATT. But when comparing it to its historical volatility, Mutual Of America is 2.34 times less risky than ATT. It trades about 0.15 of its potential returns per unit of risk. ATT Inc is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 2,183 in ATT Inc on August 26, 2024 and sell it today you would earn a total of 135.00 from holding ATT Inc or generate 6.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mutual Of America vs. ATT Inc
Performance |
| Timeline |
| Mutual Of America |
| ATT Inc |
Mutual Of and ATT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mutual Of and ATT
The main advantage of trading using opposite Mutual Of and ATT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mutual Of 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.| Mutual Of vs. Multimedia Portfolio Multimedia | Mutual Of vs. Ab E Opportunities | Mutual Of vs. L Abbett Fundamental | Mutual Of vs. Volumetric Fund Volumetric |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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