Correlation Between ATT and Suzuki
Can any of the company-specific risk be diversified away by investing in both ATT and Suzuki 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 Suzuki into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ATT Inc and Suzuki Motor, you can compare the effects of market volatilities on ATT and Suzuki 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 Suzuki. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATT and Suzuki.
Diversification Opportunities for ATT and Suzuki
Excellent diversification
The 3 months correlation between ATT and Suzuki is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and Suzuki Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suzuki Motor 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 Suzuki. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suzuki Motor has no effect on the direction of ATT i.e., ATT and Suzuki go up and down completely randomly.
Pair Corralation between ATT and Suzuki
Taking into account the 90-day investment horizon ATT Inc is expected to generate 0.42 times more return on investment than Suzuki. However, ATT Inc is 2.37 times less risky than Suzuki. It trades about 0.2 of its potential returns per unit of risk. Suzuki Motor is currently generating about -0.01 per unit of risk. If you would invest 1,680 in ATT Inc on August 24, 2024 and sell it today you would earn a total of 618.00 from holding ATT Inc or generate 36.79% 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. Suzuki Motor
Performance |
| Timeline |
| ATT Inc |
| Suzuki Motor |
ATT and Suzuki Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ATT and Suzuki
The main advantage of trading using opposite ATT and Suzuki positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATT position performs unexpectedly, Suzuki 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 Suzuki will offset losses from the drop in Suzuki's long position.| ATT vs. Small Cap Core | ATT vs. FitLife Brands, Common | ATT vs. Mutual Of America | ATT vs. Gfl Environmental Holdings |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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