Correlation Between ATT and Capital Group

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

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

Diversification Opportunities for ATT and Capital Group

0.84

Correlation Coefficient

ATT  Capital Group

Very poor diversification

The 3 months correlation between ATT and Capital is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and Capital Group Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Group Dividend 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 Capital Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Group Dividend has no effect on the direction of ATT i.e., ATT and Capital Group go up and down completely randomly.

Pair Corralation between ATT and Capital Group

Taking into account the 90-day investment horizon ATT Inc is expected to generate 2.16 times more return on investment than Capital Group. However, ATT is 2.16 times more volatile than Capital Group Dividend. It trades about 0.2 of its potential returns per unit of risk. Capital Group Dividend is currently generating about 0.16 per unit of risk. If you would invest  2,228  in ATT Inc on December 19, 2024 and sell it today you would earn a total of  433.00  from holding ATT Inc or generate 19.43% return on investment over 90 days.

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

ATT Inc  vs.  Capital Group Dividend

ATT Inc

Risk-Adjusted Performance

Solid

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 comparatively uncertain basic indicators, ATT unveiled solid returns over the last few months and may actually be approaching a breakup point.

Capital Group Dividend

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Capital Group Dividend are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating fundamental indicators, Capital Group may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with ATT and Capital Group

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

The idea behind ATT Inc and Capital Group Dividend 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.