Correlation Between ATT and Inchcape Plc
Can any of the company-specific risk be diversified away by investing in both ATT and Inchcape Plc 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 Inchcape Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ATT Inc and Inchcape plc, you can compare the effects of market volatilities on ATT and Inchcape Plc 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 Inchcape Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATT and Inchcape Plc.
Diversification Opportunities for ATT and Inchcape Plc
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ATT and Inchcape is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and Inchcape plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inchcape plc 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 Inchcape Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inchcape plc has no effect on the direction of ATT i.e., ATT and Inchcape Plc go up and down completely randomly.
Pair Corralation between ATT and Inchcape Plc
If you would invest 2,218 in ATT Inc on August 30, 2024 and sell it today you would earn a total of 109.00 from holding ATT Inc or generate 4.91% 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. Inchcape plc
Performance |
| Timeline |
| ATT Inc |
| Inchcape plc |
ATT and Inchcape Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ATT and Inchcape Plc
The main advantage of trading using opposite ATT and Inchcape Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATT position performs unexpectedly, Inchcape Plc 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 Inchcape Plc will offset losses from the drop in Inchcape Plc's long position.The idea behind ATT Inc and Inchcape plc 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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