Correlation Between ATT and Paramount Global

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

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

Diversification Opportunities for ATT and Paramount Global

-0.74

Correlation Coefficient

ATT  Paramount Global

Pay attention - limited upside

The 3 months correlation between ATT and Paramount is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and Paramount Global Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paramount Global Class 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 are associated (or correlated) with Paramount Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paramount Global Class has no effect on the direction of ATT i.e., ATT and Paramount Global go up and down completely randomly.

Pair Corralation between ATT and Paramount Global

Given the investment horizon of 90 days ATT Inc is expected to under-perform the Paramount Global. But the preferred stock apears to be less risky and, when comparing its historical volatility, ATT Inc is 1.66 times less risky than Paramount Global. The preferred stock trades about -0.08 of its potential returns per unit of risk. The Paramount Global Class is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2,186  in Paramount Global Class on September 14, 2024 and sell it today you would earn a total of  94.00  from holding Paramount Global Class or generate 4.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

ATT Inc  vs.  Paramount Global Class

ATT Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ATT Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, ATT is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Paramount Global Class

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Paramount Global Class are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Paramount Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with ATT and Paramount Global

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

The idea behind ATT Inc and Paramount Global Class 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.