Correlation Between ATT and BCE
Can any of the company-specific risk be diversified away by investing in both ATT and BCE 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 BCE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ATT Inc and BCE Inc, you can compare the effects of market volatilities on ATT and BCE 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 BCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATT and BCE.
Diversification Opportunities for ATT and BCE
Excellent diversification
The 3 months correlation between ATT and BCE is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and BCE Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BCE 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 BCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BCE Inc has no effect on the direction of ATT i.e., ATT and BCE go up and down completely randomly.
Pair Corralation between ATT and BCE
Taking into account the 90-day investment horizon ATT Inc is expected to generate 1.37 times more return on investment than BCE. However, ATT is 1.37 times more volatile than BCE Inc. It trades about 0.05 of its potential returns per unit of risk. BCE Inc is currently generating about -0.07 per unit of risk. If you would invest 1,679 in ATT Inc on August 23, 2024 and sell it today you would earn a total of 619.00 from holding ATT Inc or generate 36.87% 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. BCE Inc
Performance |
| Timeline |
| ATT Inc |
| BCE Inc |
ATT and BCE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ATT and BCE
The main advantage of trading using opposite ATT and BCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATT position performs unexpectedly, BCE 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 BCE will offset losses from the drop in BCE's long position.| ATT vs. Small Cap Core | ATT vs. FitLife Brands, Common | ATT vs. Mutual Of America | ATT vs. Gfl Environmental Holdings |
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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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