Correlation Between ATT and AbbVie
Can any of the company-specific risk be diversified away by investing in both ATT and AbbVie 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 AbbVie into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ATT Inc and AbbVie Inc, you can compare the effects of market volatilities on ATT and AbbVie 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 AbbVie. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATT and AbbVie.
Diversification Opportunities for ATT and AbbVie
Very good diversification
The 3 months correlation between ATT and AbbVie is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and AbbVie Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AbbVie Inc 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 AbbVie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AbbVie Inc has no effect on the direction of ATT i.e., ATT and AbbVie go up and down completely randomly.
Pair Corralation between ATT and AbbVie
Taking into account the 90-day investment horizon ATT Inc is expected to generate 0.74 times more return on investment than AbbVie. However, ATT Inc is 1.36 times less risky than AbbVie. It trades about 0.17 of its potential returns per unit of risk. AbbVie Inc is currently generating about 0.02 per unit of risk. If you would invest 1,620 in ATT Inc on August 27, 2024 and sell it today you would earn a total of 698.00 from holding ATT Inc or generate 43.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ATT Inc vs. AbbVie Inc
Performance |
| Timeline |
| ATT Inc |
| AbbVie Inc |
ATT and AbbVie Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ATT and AbbVie
The main advantage of trading using opposite ATT and AbbVie positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATT position performs unexpectedly, AbbVie 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 AbbVie will offset losses from the drop in AbbVie's long position.| ATT vs. Liberty Broadband Srs | ATT vs. Ribbon Communications | ATT vs. Liberty Broadband Srs | ATT vs. Shenandoah Telecommunications Co |
| AbbVie vs. Eliem Therapeutics | AbbVie vs. HCW Biologics | AbbVie vs. Scpharmaceuticals | AbbVie vs. Milestone Pharmaceuticals |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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