Correlation Between ATT and IHeartMedia
Can any of the company-specific risk be diversified away by investing in both ATT and IHeartMedia 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 IHeartMedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ATT Inc and iHeartMedia Class A, you can compare the effects of market volatilities on ATT and IHeartMedia 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 IHeartMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATT and IHeartMedia.
Diversification Opportunities for ATT and IHeartMedia
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ATT and IHeartMedia is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and iHeartMedia Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iHeartMedia Class 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 IHeartMedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iHeartMedia Class has no effect on the direction of ATT i.e., ATT and IHeartMedia go up and down completely randomly.
Pair Corralation between ATT and IHeartMedia
Taking into account the 90-day investment horizon ATT Inc is expected to generate 0.25 times more return on investment than IHeartMedia. However, ATT Inc is 4.05 times less risky than IHeartMedia. It trades about 0.05 of its potential returns per unit of risk. iHeartMedia Class A is currently generating about -0.01 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. iHeartMedia Class A
Performance |
| Timeline |
| ATT Inc |
| iHeartMedia Class |
ATT and IHeartMedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ATT and IHeartMedia
The main advantage of trading using opposite ATT and IHeartMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATT position performs unexpectedly, IHeartMedia 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 IHeartMedia will offset losses from the drop in IHeartMedia's long position.The idea behind ATT Inc and iHeartMedia Class A 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.| IHeartMedia vs. Beasley Broadcast Group | IHeartMedia vs. Saga Communications | IHeartMedia vs. E W Scripps | IHeartMedia vs. Gray Television |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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