Correlation Between ATT and OppFi
Can any of the company-specific risk be diversified away by investing in both ATT and OppFi 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 OppFi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ATT Inc and OppFi Inc, you can compare the effects of market volatilities on ATT and OppFi 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 OppFi. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATT and OppFi.
Diversification Opportunities for ATT and OppFi
Poor diversification
The 3 months correlation between ATT and OppFi is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and OppFi Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OppFi Inc 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 OppFi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OppFi Inc has no effect on the direction of ATT i.e., ATT and OppFi go up and down completely randomly.
Pair Corralation between ATT and OppFi
Taking into account the 90-day investment horizon ATT is expected to generate 3.51 times less return on investment than OppFi. But when comparing it to its historical volatility, ATT Inc is 3.21 times less risky than OppFi. It trades about 0.09 of its potential returns per unit of risk. OppFi Inc is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 216.00 in OppFi Inc on September 4, 2024 and sell it today you would earn a total of 600.00 from holding OppFi Inc or generate 277.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.73% |
| Values | Daily Returns |
ATT Inc vs. OppFi Inc
Performance |
| Timeline |
| ATT Inc |
| OppFi Inc |
ATT and OppFi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ATT and OppFi
The main advantage of trading using opposite ATT and OppFi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATT position performs unexpectedly, OppFi 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 OppFi will offset losses from the drop in OppFi's long position.The idea behind ATT Inc and OppFi Inc 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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