Correlation Between ATT and Paramount Global
Can any of the company-specific risk be diversified away by investing in both ATT and Paramount Global 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 Paramount Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ATT Inc and Paramount Global Class, you can compare the effects of market volatilities on ATT and Paramount Global 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 Paramount Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATT and Paramount Global.
Diversification Opportunities for ATT and Paramount Global
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between ATT and Paramount is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and Paramount Global Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paramount Global 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 Paramount Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paramount Global Class has no effect on the direction of ATT i.e., ATT and Paramount Global go up and down completely randomly.
Pair Corralation between ATT and Paramount Global
Taking into account the 90-day investment horizon ATT Inc is expected to generate 2.4 times more return on investment than Paramount Global. However, ATT is 2.4 times more volatile than Paramount Global Class. It trades about 0.47 of its potential returns per unit of risk. Paramount Global Class is currently generating about 0.18 per unit of risk. If you would invest 2,229 in ATT Inc on November 18, 2024 and sell it today you would earn a total of 358.00 from holding ATT Inc or generate 16.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ATT Inc vs. Paramount Global Class
Performance |
| Timeline |
| ATT Inc |
| Paramount Global Class |
ATT and Paramount Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ATT and Paramount Global
The main advantage of trading using opposite ATT and Paramount Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATT position performs unexpectedly, Paramount Global 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 Paramount Global will offset losses from the drop in Paramount Global's long position.| ATT vs. Liberty Global PLC | ATT vs. Liberty Latin America | ATT vs. Liberty Latin America | ATT vs. Liberty Broadband Srs |
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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