Correlation Between ATT and IShares Trust
Can any of the company-specific risk be diversified away by investing in both ATT and IShares Trust 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 IShares Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ATT Inc and iShares Trust, you can compare the effects of market volatilities on ATT and IShares Trust 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 IShares Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATT and IShares Trust.
Diversification Opportunities for ATT and IShares Trust
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ATT and IShares is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and iShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Trust 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 IShares Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Trust has no effect on the direction of ATT i.e., ATT and IShares Trust go up and down completely randomly.
Pair Corralation between ATT and IShares Trust
Taking into account the 90-day investment horizon ATT is expected to generate 39.87 times less return on investment than IShares Trust. But when comparing it to its historical volatility, ATT Inc is 73.3 times less risky than IShares Trust. It trades about 0.16 of its potential returns per unit of risk. iShares Trust is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 0.00 in iShares Trust on September 1, 2024 and sell it today you would earn a total of 2,610 from holding iShares Trust or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 70.74% |
| Values | Daily Returns |
ATT Inc vs. iShares Trust
Performance |
| Timeline |
| ATT Inc |
| iShares Trust |
ATT and IShares Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ATT and IShares Trust
The main advantage of trading using opposite ATT and IShares Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATT position performs unexpectedly, IShares Trust 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 IShares Trust will offset losses from the drop in IShares Trust's long position.The idea behind ATT Inc and iShares Trust 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.| IShares Trust vs. Invesco BulletShares 2025 | IShares Trust vs. iShares iBonds Dec | IShares Trust vs. Invesco BulletShares 2026 | IShares Trust vs. iShares iBonds Dec |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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