Correlation Between ATT and First Reliance
Can any of the company-specific risk be diversified away by investing in both ATT and First Reliance 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 Reliance 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 Reliance Bancshares, you can compare the effects of market volatilities on ATT and First Reliance 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 Reliance. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATT and First Reliance.
Diversification Opportunities for ATT and First Reliance
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ATT and First is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and First Reliance Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Reliance Bancshares 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 Reliance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Reliance Bancshares has no effect on the direction of ATT i.e., ATT and First Reliance go up and down completely randomly.
Pair Corralation between ATT and First Reliance
Taking into account the 90-day investment horizon ATT Inc is expected to generate 0.79 times more return on investment than First Reliance. However, ATT Inc is 1.27 times less risky than First Reliance. It trades about 0.05 of its potential returns per unit of risk. First Reliance Bancshares is currently generating about 0.02 per unit of risk. If you would invest 1,685 in ATT Inc on August 30, 2024 and sell it today you would earn a total of 642.00 from holding ATT Inc or generate 38.1% 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. First Reliance Bancshares
Performance |
| Timeline |
| ATT Inc |
| First Reliance Bancshares |
ATT and First Reliance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ATT and First Reliance
The main advantage of trading using opposite ATT and First Reliance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATT position performs unexpectedly, First Reliance 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 Reliance will offset losses from the drop in First Reliance's long position.The idea behind ATT Inc and First Reliance Bancshares 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 Reliance vs. Israel Discount Bank | First Reliance vs. Baraboo Bancorporation | First Reliance vs. Danske Bank AS | First Reliance vs. Jyske Bank AS |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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