Correlation Between Floor Decor and ATT

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

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

Diversification Opportunities for Floor Decor and ATT

-0.28

Correlation Coefficient

Floor Decor  ATT

Very good diversification

The 3 months correlation between Floor and ATT is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Floor Decor Holdings and ATT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATT Inc and Floor Decor 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 Floor Decor Holdings 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 Floor Decor i.e., Floor Decor and ATT go up and down completely randomly.

Pair Corralation between Floor Decor and ATT

Considering the 90-day investment horizon Floor Decor Holdings is expected to generate 1.88 times more return on investment than ATT. However, Floor Decor is 1.88 times more volatile than ATT Inc. It trades about 0.13 of its potential returns per unit of risk. ATT Inc is currently generating about 0.18 per unit of risk. If you would invest  10,426  in Floor Decor Holdings on September 12, 2024 and sell it today you would earn a total of  758.00  from holding Floor Decor Holdings or generate 7.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Floor Decor Holdings  vs.  ATT Inc

Floor Decor Holdings

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Floor Decor Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Floor Decor is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

ATT Inc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ATT Inc are ranked lower than 9 (%) 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 Floor Decor and ATT

The main advantage of trading using opposite Floor Decor and ATT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Floor Decor 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 Floor Decor Holdings 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.

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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.