Correlation Between ATT and GE Aerospace
Can any of the company-specific risk be diversified away by investing in both ATT and GE Aerospace 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 GE Aerospace into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ATT Inc and GE Aerospace, you can compare the effects of market volatilities on ATT and GE Aerospace 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 GE Aerospace. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATT and GE Aerospace.
Diversification Opportunities for ATT and GE Aerospace
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between ATT and GE Aerospace is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and GE Aerospace in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GE Aerospace 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 GE Aerospace. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GE Aerospace has no effect on the direction of ATT i.e., ATT and GE Aerospace go up and down completely randomly.
Pair Corralation between ATT and GE Aerospace
Taking into account the 90-day investment horizon ATT Inc is expected to generate 0.76 times more return on investment than GE Aerospace. However, ATT Inc is 1.31 times less risky than GE Aerospace. It trades about 0.19 of its potential returns per unit of risk. GE Aerospace is currently generating about 0.09 per unit of risk. If you would invest 2,211 in ATT Inc on August 28, 2024 and sell it today you would earn a total of 99.00 from holding ATT Inc or generate 4.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ATT Inc vs. GE Aerospace
Performance |
| Timeline |
| ATT Inc |
| GE Aerospace |
ATT and GE Aerospace Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ATT and GE Aerospace
The main advantage of trading using opposite ATT and GE Aerospace positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATT position performs unexpectedly, GE Aerospace 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 GE Aerospace will offset losses from the drop in GE Aerospace's long position.| ATT vs. Liberty Broadband Srs | ATT vs. Ribbon Communications | ATT vs. Liberty Broadband Srs | ATT vs. Shenandoah Telecommunications Co |
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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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