Correlation Between ATT and ACGR
Can any of the company-specific risk be diversified away by investing in both ATT and ACGR 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 ACGR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ATT Inc and ACGR, you can compare the effects of market volatilities on ATT and ACGR 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 ACGR. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATT and ACGR.
Diversification Opportunities for ATT and ACGR
Weak diversification
The 3 months correlation between ATT and ACGR is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and ACGR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ACGR 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 ACGR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ACGR has no effect on the direction of ATT i.e., ATT and ACGR go up and down completely randomly.
Pair Corralation between ATT and ACGR
Taking into account the 90-day investment horizon ATT Inc is expected to under-perform the ACGR. But the stock apears to be less risky and, when comparing its historical volatility, ATT Inc is 1.37 times less risky than ACGR. The stock trades about -0.1 of its potential returns per unit of risk. The ACGR is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 5,981 in ACGR on October 25, 2024 and sell it today you would lose (24.00) from holding ACGR or give up 0.4% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
ATT Inc vs. ACGR
Performance |
Timeline |
ATT Inc |
ACGR |
ATT and ACGR Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with ATT and ACGR
The main advantage of trading using opposite ATT and ACGR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATT position performs unexpectedly, ACGR 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 ACGR will offset losses from the drop in ACGR's long position.ATT vs. Verizon Communications | ATT vs. Bank of America | ATT vs. RLJ Lodging Trust | ATT vs. PennyMac Finl Svcs |
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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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