Correlation Between NYSE Composite and ATT
Can any of the company-specific risk be diversified away by investing in both NYSE Composite 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 NYSE Composite and ATT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and ATT Inc, you can compare the effects of market volatilities on NYSE Composite 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 NYSE Composite with a short position of ATT. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and ATT.
Diversification Opportunities for NYSE Composite and ATT
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and ATT is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and ATT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATT Inc and NYSE Composite 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 NYSE Composite 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 NYSE Composite i.e., NYSE Composite and ATT go up and down completely randomly.
Pair Corralation between NYSE Composite and ATT
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.79 times less return on investment than ATT. But when comparing it to its historical volatility, NYSE Composite is 1.66 times less risky than ATT. It trades about 0.24 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 Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. ATT Inc
Performance |
| Timeline |
NYSE Composite and ATT Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
ATT Inc
Pair trading matchups for ATT
Pair Trading with NYSE Composite and ATT
The main advantage of trading using opposite NYSE Composite and ATT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite 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.| NYSE Composite vs. Grocery Outlet Holding | NYSE Composite vs. Tencent Music Entertainment | NYSE Composite vs. SunLink Health Systems | NYSE Composite vs. Getty Realty |
| ATT vs. Liberty Broadband Srs | ATT vs. Ribbon Communications | ATT vs. Liberty Broadband Srs | ATT vs. Shenandoah Telecommunications Co |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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