Correlation Between ATT and Juniper
Can any of the company-specific risk be diversified away by investing in both ATT and Juniper 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 Juniper into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ATT Inc and Juniper Group, you can compare the effects of market volatilities on ATT and Juniper 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 Juniper. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATT and Juniper.
Diversification Opportunities for ATT and Juniper
Poor diversification
The 3 months correlation between ATT and Juniper is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and Juniper Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Juniper Group 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 Juniper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Juniper Group has no effect on the direction of ATT i.e., ATT and Juniper go up and down completely randomly.
Pair Corralation between ATT and Juniper
Taking into account the 90-day investment horizon ATT Inc is expected to generate 3.44 times more return on investment than Juniper. However, ATT is 3.44 times more volatile than Juniper Group. It trades about 0.14 of its potential returns per unit of risk. Juniper Group is currently generating about 0.17 per unit of risk. If you would invest 2,172 in ATT Inc on August 30, 2024 and sell it today you would earn a total of 155.00 from holding ATT Inc or generate 7.14% 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. Juniper Group
Performance |
| Timeline |
| ATT Inc |
| Juniper Group |
ATT and Juniper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ATT and Juniper
The main advantage of trading using opposite ATT and Juniper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATT position performs unexpectedly, Juniper 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 Juniper will offset losses from the drop in Juniper's long position.The idea behind ATT Inc and Juniper Group 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.| Juniper vs. FT Vest Equity | Juniper vs. Northern Lights | Juniper vs. Dimensional International High | Juniper vs. First Trust Exchange Traded |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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