Correlation Between ATT and Applied Finance
Can any of the company-specific risk be diversified away by investing in both ATT and Applied Finance 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 Applied Finance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ATT Inc and Applied Finance Core, you can compare the effects of market volatilities on ATT and Applied Finance 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 Applied Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATT and Applied Finance.
Diversification Opportunities for ATT and Applied Finance
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ATT and Applied is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and Applied Finance Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Finance Core 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 Applied Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Finance Core has no effect on the direction of ATT i.e., ATT and Applied Finance go up and down completely randomly.
Pair Corralation between ATT and Applied Finance
Taking into account the 90-day investment horizon ATT Inc is expected to generate 2.01 times more return on investment than Applied Finance. However, ATT is 2.01 times more volatile than Applied Finance Core. It trades about 0.09 of its potential returns per unit of risk. Applied Finance Core is currently generating about 0.11 per unit of risk. If you would invest 1,459 in ATT Inc on August 31, 2024 and sell it today you would earn a total of 857.00 from holding ATT Inc or generate 58.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.73% |
| Values | Daily Returns |
ATT Inc vs. Applied Finance Core
Performance |
| Timeline |
| ATT Inc |
| Applied Finance Core |
ATT and Applied Finance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ATT and Applied Finance
The main advantage of trading using opposite ATT and Applied Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATT position performs unexpectedly, Applied Finance 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 Applied Finance will offset losses from the drop in Applied Finance's long position.| ATT vs. RLJ Lodging Trust | ATT vs. Aquagold International | ATT vs. Stepstone Group | ATT vs. Morningstar Unconstrained Allocation |
| Applied Finance vs. Icon Financial Fund | Applied Finance vs. Goldman Sachs Financial | Applied Finance vs. Prudential Jennison Financial | Applied Finance vs. Gabelli Global Financial |
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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