Correlation Between ATT and Yokohama Rubber
Can any of the company-specific risk be diversified away by investing in both ATT and Yokohama Rubber 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 Yokohama Rubber into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ATT Inc and The Yokohama Rubber, you can compare the effects of market volatilities on ATT and Yokohama Rubber 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 Yokohama Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATT and Yokohama Rubber.
Diversification Opportunities for ATT and Yokohama Rubber
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between ATT and Yokohama is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and The Yokohama Rubber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yokohama Rubber 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 Yokohama Rubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yokohama Rubber has no effect on the direction of ATT i.e., ATT and Yokohama Rubber go up and down completely randomly.
Pair Corralation between ATT and Yokohama Rubber
Taking into account the 90-day investment horizon ATT Inc is expected to generate 0.7 times more return on investment than Yokohama Rubber. However, ATT Inc is 1.43 times less risky than Yokohama Rubber. It trades about 0.1 of its potential returns per unit of risk. The Yokohama Rubber is currently generating about 0.06 per unit of risk. If you would invest 1,433 in ATT Inc on September 12, 2024 and sell it today you would earn a total of 918.00 from holding ATT Inc or generate 64.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 42.09% |
| Values | Daily Returns |
ATT Inc vs. The Yokohama Rubber
Performance |
| Timeline |
| ATT Inc |
| Yokohama Rubber |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
ATT and Yokohama Rubber Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ATT and Yokohama Rubber
The main advantage of trading using opposite ATT and Yokohama Rubber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATT position performs unexpectedly, Yokohama Rubber 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 Yokohama Rubber will offset losses from the drop in Yokohama Rubber's long position.| ATT vs. Victory Integrity Smallmid Cap | ATT vs. Hilton Worldwide Holdings | ATT vs. NVIDIA | ATT vs. JPMorgan Chase Co |
| Yokohama Rubber vs. BorgWarner | Yokohama Rubber vs. American Axle Manufacturing | Yokohama Rubber vs. Magna International | Yokohama Rubber vs. Dana Inc |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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