Correlation Between ATT and Innovator Equity
Can any of the company-specific risk be diversified away by investing in both ATT and Innovator Equity 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 Innovator Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ATT Inc and Innovator Equity Ultra, you can compare the effects of market volatilities on ATT and Innovator Equity 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 Innovator Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATT and Innovator Equity.
Diversification Opportunities for ATT and Innovator Equity
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ATT and Innovator is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and Innovator Equity Ultra in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator Equity Ultra 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 Innovator Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator Equity Ultra has no effect on the direction of ATT i.e., ATT and Innovator Equity go up and down completely randomly.
Pair Corralation between ATT and Innovator Equity
Taking into account the 90-day investment horizon ATT Inc is expected to generate 3.05 times more return on investment than Innovator Equity. However, ATT is 3.05 times more volatile than Innovator Equity Ultra. It trades about 0.14 of its potential returns per unit of risk. Innovator Equity Ultra is currently generating about 0.38 per unit of risk. If you would invest 2,254 in ATT Inc on September 1, 2024 and sell it today you would earn a total of 62.00 from holding ATT Inc or generate 2.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
ATT Inc vs. Innovator Equity Ultra
Performance |
| Timeline |
| ATT Inc |
| Innovator Equity Ultra |
ATT and Innovator Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ATT and Innovator Equity
The main advantage of trading using opposite ATT and Innovator Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATT position performs unexpectedly, Innovator Equity 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 Innovator Equity will offset losses from the drop in Innovator Equity's long position.The idea behind ATT Inc and Innovator Equity Ultra 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.| Innovator Equity vs. Innovator ETFs Trust | Innovator Equity vs. First Trust Cboe | Innovator Equity vs. Innovator SP 500 | Innovator Equity vs. Innovator Equity Power |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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