Correlation Between ATT and Bankinter
Can any of the company-specific risk be diversified away by investing in both ATT and Bankinter 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 Bankinter into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ATT Inc and Bankinter SA ADR, you can compare the effects of market volatilities on ATT and Bankinter 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 Bankinter. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATT and Bankinter.
Diversification Opportunities for ATT and Bankinter
Very poor diversification
The 3 months correlation between ATT and Bankinter is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and Bankinter SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bankinter SA ADR 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 Bankinter. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bankinter SA ADR has no effect on the direction of ATT i.e., ATT and Bankinter go up and down completely randomly.
Pair Corralation between ATT and Bankinter
Taking into account the 90-day investment horizon ATT Inc is expected to generate 0.52 times more return on investment than Bankinter. However, ATT Inc is 1.91 times less risky than Bankinter. It trades about 0.2 of its potential returns per unit of risk. Bankinter SA ADR is currently generating about 0.05 per unit of risk. If you would invest 1,940 in ATT Inc on November 28, 2024 and sell it today you would earn a total of 725.00 from holding ATT Inc or generate 37.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.87% |
| Values | Daily Returns |
ATT Inc vs. Bankinter SA ADR
Performance |
| Timeline |
| ATT Inc |
| Bankinter SA ADR |
ATT and Bankinter Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ATT and Bankinter
The main advantage of trading using opposite ATT and Bankinter positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATT position performs unexpectedly, Bankinter 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 Bankinter will offset losses from the drop in Bankinter's long position.The idea behind ATT Inc and Bankinter SA ADR pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Bankinter vs. Bank Hapoalim ADR | Bankinter vs. Bank of East | Bankinter vs. BOC Hong Kong | Bankinter vs. Commercial International Bank |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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