Correlation Between ATT and Spirent Communications
Can any of the company-specific risk be diversified away by investing in both ATT and Spirent Communications 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 Spirent Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ATT Inc and Spirent Communications plc, you can compare the effects of market volatilities on ATT and Spirent Communications 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 Spirent Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATT and Spirent Communications.
Diversification Opportunities for ATT and Spirent Communications
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ATT and Spirent is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and Spirent Communications plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spirent Communications 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 Spirent Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spirent Communications has no effect on the direction of ATT i.e., ATT and Spirent Communications go up and down completely randomly.
Pair Corralation between ATT and Spirent Communications
Assuming the 90 days trading horizon ATT Inc is expected to generate 0.29 times more return on investment than Spirent Communications. However, ATT Inc is 3.51 times less risky than Spirent Communications. It trades about 0.14 of its potential returns per unit of risk. Spirent Communications plc is currently generating about 0.03 per unit of risk. If you would invest 1,249 in ATT Inc on August 29, 2024 and sell it today you would earn a total of 951.00 from holding ATT Inc or generate 76.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ATT Inc vs. Spirent Communications plc
Performance |
| Timeline |
| ATT Inc |
| Spirent Communications |
ATT and Spirent Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ATT and Spirent Communications
The main advantage of trading using opposite ATT and Spirent Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATT position performs unexpectedly, Spirent Communications 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 Spirent Communications will offset losses from the drop in Spirent Communications' long position.The idea behind ATT Inc and Spirent Communications plc 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.| Spirent Communications vs. Verizon Communications | Spirent Communications vs. ATT Inc | Spirent Communications vs. ATT Inc | Spirent Communications vs. Deutsche Telekom AG |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
Other Complementary Tools
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios |