Correlation Between ATT and Fidelity International
Can any of the company-specific risk be diversified away by investing in both ATT and Fidelity International 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 Fidelity International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ATT Inc and Fidelity International High, you can compare the effects of market volatilities on ATT and Fidelity International 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 Fidelity International. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATT and Fidelity International.
Diversification Opportunities for ATT and Fidelity International
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ATT and Fidelity is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and Fidelity International High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity International 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 Fidelity International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity International has no effect on the direction of ATT i.e., ATT and Fidelity International go up and down completely randomly.
Pair Corralation between ATT and Fidelity International
Taking into account the 90-day investment horizon ATT Inc is expected to generate 1.17 times more return on investment than Fidelity International. However, ATT is 1.17 times more volatile than Fidelity International High. It trades about 0.14 of its potential returns per unit of risk. Fidelity International High is currently generating about -0.05 per unit of risk. If you would invest 2,254 in ATT Inc on September 1, 2024 and sell it today you would earn a total of 62.00 from holding ATT Inc or generate 2.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ATT Inc vs. Fidelity International High
Performance |
| Timeline |
| ATT Inc |
| Fidelity International |
ATT and Fidelity International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ATT and Fidelity International
The main advantage of trading using opposite ATT and Fidelity International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATT position performs unexpectedly, Fidelity International 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 Fidelity International will offset losses from the drop in Fidelity International's long position.The idea behind ATT Inc and Fidelity International High 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.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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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