Correlation Between ATT and Deutsche Telekom
Can any of the company-specific risk be diversified away by investing in both ATT and Deutsche Telekom 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 Deutsche Telekom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ATT Inc and Deutsche Telekom AG, you can compare the effects of market volatilities on ATT and Deutsche Telekom 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 Deutsche Telekom. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATT and Deutsche Telekom.
Diversification Opportunities for ATT and Deutsche Telekom
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ATT and Deutsche is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and Deutsche Telekom AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Telekom 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 Deutsche Telekom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Telekom has no effect on the direction of ATT i.e., ATT and Deutsche Telekom go up and down completely randomly.
Pair Corralation between ATT and Deutsche Telekom
Assuming the 90 days trading horizon ATT is expected to generate 1.18 times less return on investment than Deutsche Telekom. But when comparing it to its historical volatility, ATT Inc is 1.54 times less risky than Deutsche Telekom. It trades about 0.22 of its potential returns per unit of risk. Deutsche Telekom AG is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 2,780 in Deutsche Telekom AG on September 1, 2024 and sell it today you would earn a total of 220.00 from holding Deutsche Telekom AG or generate 7.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ATT Inc vs. Deutsche Telekom AG
Performance |
| Timeline |
| ATT Inc |
| Deutsche Telekom |
ATT and Deutsche Telekom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ATT and Deutsche Telekom
The main advantage of trading using opposite ATT and Deutsche Telekom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATT position performs unexpectedly, Deutsche Telekom 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 Deutsche Telekom will offset losses from the drop in Deutsche Telekom's long position.| ATT vs. The Trade Desk | ATT vs. Constellation Software | ATT vs. Alfa Financial Software | ATT vs. CARSALESCOM |
| Deutsche Telekom vs. OFFICE DEPOT | Deutsche Telekom vs. INTERSHOP Communications Aktiengesellschaft | Deutsche Telekom vs. Ribbon Communications | Deutsche Telekom vs. Gamma Communications plc |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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