Correlation Between ATT and Scentre
Can any of the company-specific risk be diversified away by investing in both ATT and Scentre 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 Scentre into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ATT Inc and Scentre Group, you can compare the effects of market volatilities on ATT and Scentre 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 Scentre. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATT and Scentre.
Diversification Opportunities for ATT and Scentre
Very weak diversification
The 3 months correlation between ATT and Scentre is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and Scentre Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scentre 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 Scentre. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scentre Group has no effect on the direction of ATT i.e., ATT and Scentre go up and down completely randomly.
Pair Corralation between ATT and Scentre
Taking into account the 90-day investment horizon ATT Inc is expected to generate 0.63 times more return on investment than Scentre. However, ATT Inc is 1.59 times less risky than Scentre. It trades about -0.1 of its potential returns per unit of risk. Scentre Group is currently generating about -0.24 per unit of risk. If you would invest 2,266 in ATT Inc on October 25, 2024 and sell it today you would lose (34.00) from holding ATT Inc or give up 1.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ATT Inc vs. Scentre Group
Performance |
| Timeline |
| ATT Inc |
| Scentre Group |
ATT and Scentre Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ATT and Scentre
The main advantage of trading using opposite ATT and Scentre positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATT position performs unexpectedly, Scentre 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 Scentre will offset losses from the drop in Scentre's long position.| ATT vs. Verizon Communications | ATT vs. Bank of America | ATT vs. RLJ Lodging Trust | ATT vs. PennyMac Finl Svcs |
| Scentre vs. Mapletree Commercial Trust | Scentre vs. Retail Opportunity Investments | Scentre vs. Kimco Realty |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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