Correlation Between ATT and International Petroleum
Can any of the company-specific risk be diversified away by investing in both ATT and International Petroleum 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 International Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ATT Inc and International Petroleum, you can compare the effects of market volatilities on ATT and International Petroleum 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 International Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATT and International Petroleum.
Diversification Opportunities for ATT and International Petroleum
-0.88 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between ATT and International is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and International Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Petroleum 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 International Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Petroleum has no effect on the direction of ATT i.e., ATT and International Petroleum go up and down completely randomly.
Pair Corralation between ATT and International Petroleum
Taking into account the 90-day investment horizon ATT Inc is expected to generate 0.36 times more return on investment than International Petroleum. However, ATT Inc is 2.78 times less risky than International Petroleum. It trades about 0.33 of its potential returns per unit of risk. International Petroleum is currently generating about -0.04 per unit of risk. If you would invest 2,192 in ATT Inc on September 3, 2024 and sell it today you would earn a total of 124.00 from holding ATT Inc or generate 5.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ATT Inc vs. International Petroleum
Performance |
| Timeline |
| ATT Inc |
| International Petroleum |
ATT and International Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ATT and International Petroleum
The main advantage of trading using opposite ATT and International Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATT position performs unexpectedly, International Petroleum 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 International Petroleum will offset losses from the drop in International Petroleum's long position.| ATT vs. Highway Holdings Limited | ATT vs. QCR Holdings | ATT vs. Partner Communications | ATT vs. Acumen Pharmaceuticals |
| International Petroleum vs. 1st NRG Corp | International Petroleum vs. Otto Energy Limited | International Petroleum vs. Razor Energy Corp | International Petroleum vs. Prospera Energy |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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