Correlation Between Intel and ATT

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

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

Diversification Opportunities for Intel and ATT

0.58

Correlation Coefficient

Intel  ATT

Very weak diversification

The 3 months correlation between Intel and ATT is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Intel and ATT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATT Inc and Intel 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 Intel 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 Intel i.e., Intel and ATT go up and down completely randomly.

Pair Corralation between Intel and ATT

Assuming the 90 days trading horizon Intel is expected to generate 1.16 times less return on investment than ATT. In addition to that, Intel is 2.01 times more volatile than ATT Inc. It trades about 0.08 of its total potential returns per unit of risk. ATT Inc is currently generating about 0.19 per unit of volatility. If you would invest  45,911  in ATT Inc on December 28, 2024 and sell it today you would earn a total of  11,786  from holding ATT Inc or generate 25.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Intel  vs.  ATT Inc

Intel

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Intel are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Intel showed solid returns over the last few months and may actually be approaching a breakup point.

ATT Inc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ATT Inc are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak primary indicators, ATT showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Intel and ATT

The main advantage of trading using opposite Intel and ATT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intel 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 Intel 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.