Correlation Between ATT and Southern
Can any of the company-specific risk be diversified away by investing in both ATT and Southern 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 Southern 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 Southern Co, you can compare the effects of market volatilities on ATT and Southern 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 Southern. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATT and Southern.
Diversification Opportunities for ATT and Southern
Weak diversification
The 3 months correlation between ATT and Southern is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc ELKS and Southern Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern 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 Southern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern has no effect on the direction of ATT i.e., ATT and Southern go up and down completely randomly.
Pair Corralation between ATT and Southern
Considering the 90-day investment horizon ATT Inc ELKS is expected to generate 0.93 times more return on investment than Southern. However, ATT Inc ELKS is 1.08 times less risky than Southern. It trades about 0.05 of its potential returns per unit of risk. Southern Co is currently generating about 0.0 per unit of risk. If you would invest 2,380 in ATT Inc ELKS on August 27, 2024 and sell it today you would earn a total of 128.00 from holding ATT Inc ELKS or generate 5.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ATT Inc ELKS vs. Southern Co
Performance |
| Timeline |
| ATT Inc ELKS |
| Southern |
ATT and Southern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ATT and Southern
The main advantage of trading using opposite ATT and Southern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATT position performs unexpectedly, Southern 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 Southern will offset losses from the drop in Southern's long position.The idea behind ATT Inc ELKS and Southern Co 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.| Southern vs. AKITA Drilling | Southern vs. Transocean | Southern vs. Universal Technical Institute | Southern vs. AMREP |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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