Correlation Between ATT and Brunswick Corp
Can any of the company-specific risk be diversified away by investing in both ATT and Brunswick Corp 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 Brunswick Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ATT Inc ELKS and Brunswick Corp, you can compare the effects of market volatilities on ATT and Brunswick Corp 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 Brunswick Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATT and Brunswick Corp.
Diversification Opportunities for ATT and Brunswick Corp
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ATT and Brunswick is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc ELKS and Brunswick Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brunswick Corp 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 ELKS are associated (or correlated) with Brunswick Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brunswick Corp has no effect on the direction of ATT i.e., ATT and Brunswick Corp go up and down completely randomly.
Pair Corralation between ATT and Brunswick Corp
Considering the 90-day investment horizon ATT Inc ELKS is expected to generate 1.24 times more return on investment than Brunswick Corp. However, ATT is 1.24 times more volatile than Brunswick Corp. It trades about 0.03 of its potential returns per unit of risk. Brunswick Corp is currently generating about -0.06 per unit of risk. If you would invest 2,497 in ATT Inc ELKS on August 28, 2024 and sell it today you would earn a total of 12.00 from holding ATT Inc ELKS or generate 0.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ATT Inc ELKS vs. Brunswick Corp
Performance |
| Timeline |
| ATT Inc ELKS |
| Brunswick Corp |
ATT and Brunswick Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ATT and Brunswick Corp
The main advantage of trading using opposite ATT and Brunswick Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATT position performs unexpectedly, Brunswick Corp 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 Brunswick Corp will offset losses from the drop in Brunswick Corp's long position.The idea behind ATT Inc ELKS and Brunswick Corp 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.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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
Other Complementary Tools
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments |