Correlation Between ATT and Telephone
Can any of the company-specific risk be diversified away by investing in both ATT and Telephone 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 Telephone into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ATT Inc and Telephone and Data, you can compare the effects of market volatilities on ATT and Telephone 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 Telephone. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATT and Telephone.
Diversification Opportunities for ATT and Telephone
Very weak diversification
The 3 months correlation between ATT and Telephone is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and Telephone and Data in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telephone and Data 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 Telephone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telephone and Data has no effect on the direction of ATT i.e., ATT and Telephone go up and down completely randomly.
Pair Corralation between ATT and Telephone
Given the investment horizon of 90 days ATT is expected to generate 3.15 times less return on investment than Telephone. But when comparing it to its historical volatility, ATT Inc is 2.07 times less risky than Telephone. It trades about 0.03 of its potential returns per unit of risk. Telephone and Data is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,537 in Telephone and Data on November 9, 2024 and sell it today you would earn a total of 664.00 from holding Telephone and Data or generate 43.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ATT Inc vs. Telephone and Data
Performance |
| Timeline |
| ATT Inc |
| Telephone and Data |
ATT and Telephone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ATT and Telephone
The main advantage of trading using opposite ATT and Telephone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATT position performs unexpectedly, Telephone 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 Telephone will offset losses from the drop in Telephone's long position.The idea behind ATT Inc and Telephone and Data 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.| Telephone vs. Telephone and Data | Telephone vs. SiriusPoint | Telephone vs. XOMA Corporation | Telephone vs. Sachem Capital Corp |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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