Correlation Between Apple and ATT

Can any of the company-specific risk be diversified away by investing in both Apple and ATT 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 Apple and ATT into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Apple Inc and ATT Inc, you can compare the effects of market volatilities on Apple and ATT 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 Apple with a short position of ATT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and ATT.

Diversification Opportunities for Apple and ATT

0.61

Correlation Coefficient

Apple  ATT

Poor diversification

The 3 months correlation between Apple and ATT is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and ATT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATT Inc and Apple 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 Apple Inc are associated (or correlated) with ATT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATT Inc has no effect on the direction of Apple i.e., Apple and ATT go up and down completely randomly.

Pair Corralation between Apple and ATT

Given the investment horizon of 90 days Apple Inc is expected to generate 0.89 times more return on investment than ATT. However, Apple Inc is 1.12 times less risky than ATT. It trades about 0.11 of its potential returns per unit of risk. ATT Inc is currently generating about 0.05 per unit of risk. If you would invest  12,377  in Apple Inc on September 24, 2024 and sell it today you would earn a total of  13,072  from holding Apple Inc or generate 105.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

Apple Inc  vs.  ATT Inc

Apple Inc

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain basic indicators, Apple may actually be approaching a critical reversion point that can send shares even higher in January 2025.

ATT Inc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ATT Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, ATT may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Apple and ATT

The main advantage of trading using opposite Apple and ATT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, ATT 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 ATT will offset losses from the drop in ATT's long position.

The idea behind Apple Inc and ATT Inc 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.

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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.