Correlation Between ATT and AIB Group
Can any of the company-specific risk be diversified away by investing in both ATT and AIB Group 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 AIB Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ATT Inc and AIB Group plc, you can compare the effects of market volatilities on ATT and AIB Group 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 AIB Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATT and AIB Group.
Diversification Opportunities for ATT and AIB Group
Excellent diversification
The 3 months correlation between ATT and AIB is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and AIB Group plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIB Group 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 AIB Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIB Group plc has no effect on the direction of ATT i.e., ATT and AIB Group go up and down completely randomly.
Pair Corralation between ATT and AIB Group
Taking into account the 90-day investment horizon ATT Inc is expected to generate 0.35 times more return on investment than AIB Group. However, ATT Inc is 2.85 times less risky than AIB Group. It trades about 0.33 of its potential returns per unit of risk. AIB Group plc is currently generating about 0.01 per unit of risk. If you would invest 2,192 in ATT Inc on September 3, 2024 and sell it today you would earn a total of 124.00 from holding ATT Inc or generate 5.66% 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. AIB Group plc
Performance |
| Timeline |
| ATT Inc |
| AIB Group plc |
ATT and AIB Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ATT and AIB Group
The main advantage of trading using opposite ATT and AIB Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATT position performs unexpectedly, AIB Group 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 AIB Group will offset losses from the drop in AIB Group's long position.| ATT vs. Highway Holdings Limited | ATT vs. QCR Holdings | ATT vs. Partner Communications | ATT vs. Acumen Pharmaceuticals |
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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