Correlation Between ATT and SPAR
Can any of the company-specific risk be diversified away by investing in both ATT and SPAR 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 SPAR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ATT Inc and SPAR Group, you can compare the effects of market volatilities on ATT and SPAR 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 SPAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATT and SPAR.
Diversification Opportunities for ATT and SPAR
Very good diversification
The 3 months correlation between ATT and SPAR is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and SPAR Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPAR 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 SPAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPAR Group has no effect on the direction of ATT i.e., ATT and SPAR go up and down completely randomly.
Pair Corralation between ATT and SPAR
Taking into account the 90-day investment horizon ATT Inc is expected to generate 0.77 times more return on investment than SPAR. However, ATT Inc is 1.29 times less risky than SPAR. It trades about 0.16 of its potential returns per unit of risk. SPAR Group is currently generating about 0.06 per unit of risk. If you would invest 2,254 in ATT Inc on November 3, 2024 and sell it today you would earn a total of 119.00 from holding ATT Inc or generate 5.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
ATT Inc vs. SPAR Group
Performance |
| Timeline |
| ATT Inc |
| SPAR Group |
ATT and SPAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ATT and SPAR
The main advantage of trading using opposite ATT and SPAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATT position performs unexpectedly, SPAR 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 SPAR will offset losses from the drop in SPAR's long position.The idea behind ATT Inc and SPAR 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.| SPAR vs. Mitie Group Plc | SPAR vs. Dexterra Group | SPAR vs. Wildpack Beverage | SPAR vs. Intertek Group Plc |
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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