Correlation Between ATT and First Northern
Can any of the company-specific risk be diversified away by investing in both ATT and First Northern 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 First Northern into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ATT Inc and First Northern Community, you can compare the effects of market volatilities on ATT and First Northern 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 First Northern. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATT and First Northern.
Diversification Opportunities for ATT and First Northern
-0.86 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between ATT and First is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and First Northern Community in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Northern Community 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 First Northern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Northern Community has no effect on the direction of ATT i.e., ATT and First Northern go up and down completely randomly.
Pair Corralation between ATT and First Northern
Taking into account the 90-day investment horizon ATT Inc is expected to generate 4.41 times more return on investment than First Northern. However, ATT is 4.41 times more volatile than First Northern Community. It trades about 0.2 of its potential returns per unit of risk. First Northern Community is currently generating about -0.17 per unit of risk. If you would invest 2,215 in ATT Inc on September 13, 2024 and sell it today you would earn a total of 135.00 from holding ATT Inc or generate 6.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
ATT Inc vs. First Northern Community
Performance |
| Timeline |
| ATT Inc |
| First Northern Community |
ATT and First Northern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ATT and First Northern
The main advantage of trading using opposite ATT and First Northern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATT position performs unexpectedly, First Northern 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 First Northern will offset losses from the drop in First Northern's long position.The idea behind ATT Inc and First Northern Community 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.| First Northern vs. Community West Bancshares | First Northern vs. Home Bancorp | First Northern vs. CB Financial Services | First Northern vs. Civista Bancshares |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm |