Correlation Between ATT and Deswell Industries
Can any of the company-specific risk be diversified away by investing in both ATT and Deswell Industries 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 Deswell Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ATT Inc and Deswell Industries, you can compare the effects of market volatilities on ATT and Deswell Industries 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 Deswell Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATT and Deswell Industries.
Diversification Opportunities for ATT and Deswell Industries
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ATT and Deswell is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and Deswell Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deswell Industries 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 Deswell Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deswell Industries has no effect on the direction of ATT i.e., ATT and Deswell Industries go up and down completely randomly.
Pair Corralation between ATT and Deswell Industries
Taking into account the 90-day investment horizon ATT Inc is expected to generate 0.59 times more return on investment than Deswell Industries. However, ATT Inc is 1.68 times less risky than Deswell Industries. It trades about 0.13 of its potential returns per unit of risk. Deswell Industries is currently generating about 0.02 per unit of risk. If you would invest 1,578 in ATT Inc on August 27, 2024 and sell it today you would earn a total of 740.00 from holding ATT Inc or generate 46.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ATT Inc vs. Deswell Industries
Performance |
| Timeline |
| ATT Inc |
| Deswell Industries |
ATT and Deswell Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ATT and Deswell Industries
The main advantage of trading using opposite ATT and Deswell Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATT position performs unexpectedly, Deswell Industries 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 Deswell Industries will offset losses from the drop in Deswell Industries' long position.| ATT vs. Liberty Broadband Srs | ATT vs. Ribbon Communications | ATT vs. Liberty Broadband Srs | ATT vs. Shenandoah Telecommunications Co |
| Deswell Industries vs. Plexus Corp | Deswell Industries vs. Benchmark Electronics | Deswell Industries vs. Jabil Circuit | Deswell Industries vs. Sanmina |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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