Correlation Between ATT and Ribbon Communications
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By analyzing existing cross correlation between ATT Inc and Ribbon Communications, you can compare the effects of market volatilities on ATT and Ribbon 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 Ribbon Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATT and Ribbon Communications.
Diversification Opportunities for ATT and Ribbon Communications
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ATT and Ribbon is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and Ribbon Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ribbon 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 Ribbon Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ribbon Communications has no effect on the direction of ATT i.e., ATT and Ribbon Communications go up and down completely randomly.
Pair Corralation between ATT and Ribbon Communications
Assuming the 90 days trading horizon ATT is expected to generate 1.52 times less return on investment than Ribbon Communications. But when comparing it to its historical volatility, ATT Inc is 2.97 times less risky than Ribbon Communications. It trades about 0.15 of its potential returns per unit of risk. Ribbon Communications is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 194.00 in Ribbon Communications on September 1, 2024 and sell it today you would earn a total of 154.00 from holding Ribbon Communications or generate 79.38% 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. Ribbon Communications
Performance |
| Timeline |
| ATT Inc |
| Ribbon Communications |
ATT and Ribbon Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ATT and Ribbon Communications
The main advantage of trading using opposite ATT and Ribbon Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATT position performs unexpectedly, Ribbon 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 Ribbon Communications will offset losses from the drop in Ribbon Communications' long position.The idea behind ATT Inc and Ribbon Communications 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.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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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