Correlation Between ATT and Airtel Africa
Can any of the company-specific risk be diversified away by investing in both ATT and Airtel Africa 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 Airtel Africa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ATT Inc and Airtel Africa Plc, you can compare the effects of market volatilities on ATT and Airtel Africa 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 Airtel Africa. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATT and Airtel Africa.
Diversification Opportunities for ATT and Airtel Africa
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ATT and Airtel is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and Airtel Africa Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airtel Africa Plc 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 Airtel Africa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airtel Africa Plc has no effect on the direction of ATT i.e., ATT and Airtel Africa go up and down completely randomly.
Pair Corralation between ATT and Airtel Africa
Taking into account the 90-day investment horizon ATT Inc is expected to generate 0.34 times more return on investment than Airtel Africa. However, ATT Inc is 2.9 times less risky than Airtel Africa. It trades about 0.24 of its potential returns per unit of risk. Airtel Africa Plc is currently generating about -0.19 per unit of risk. If you would invest 2,202 in ATT Inc on August 31, 2024 and sell it today you would earn a total of 125.00 from holding ATT Inc or generate 5.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ATT Inc vs. Airtel Africa Plc
Performance |
| Timeline |
| ATT Inc |
| Airtel Africa Plc |
ATT and Airtel Africa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ATT and Airtel Africa
The main advantage of trading using opposite ATT and Airtel Africa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATT position performs unexpectedly, Airtel Africa 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 Airtel Africa will offset losses from the drop in Airtel Africa's long position.| ATT vs. RLJ Lodging Trust | ATT vs. Aquagold International | ATT vs. Stepstone Group | ATT vs. Morningstar Unconstrained Allocation |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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