Correlation Between ATT and Nova
Can any of the company-specific risk be diversified away by investing in both ATT and Nova 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 Nova into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ATT Inc and Nova, you can compare the effects of market volatilities on ATT and Nova 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 Nova. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATT and Nova.
Diversification Opportunities for ATT and Nova
Pay attention - limited upside
The 3 months correlation between ATT and Nova is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and Nova in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nova 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 Nova. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nova has no effect on the direction of ATT i.e., ATT and Nova go up and down completely randomly.
Pair Corralation between ATT and Nova
Taking into account the 90-day investment horizon ATT Inc is expected to generate 0.3 times more return on investment than Nova. However, ATT Inc is 3.29 times less risky than Nova. It trades about 0.24 of its potential returns per unit of risk. Nova is currently generating about -0.16 per unit of risk. If you would invest 2,202 in ATT Inc on August 31, 2024 and sell it today you would earn a total of 125.00 from holding ATT Inc or generate 5.68% 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. Nova
Performance |
| Timeline |
| ATT Inc |
| Nova |
ATT and Nova Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ATT and Nova
The main advantage of trading using opposite ATT and Nova positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATT position performs unexpectedly, Nova 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 Nova will offset losses from the drop in Nova's long position.| ATT vs. RLJ Lodging Trust | ATT vs. Aquagold International | ATT vs. Stepstone Group | ATT vs. Morningstar Unconstrained Allocation |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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