Correlation Between ATT and Canadian Palladium

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

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

Diversification Opportunities for ATT and Canadian Palladium

-0.71

Correlation Coefficient

ATT  Canadian Palladium

Pay attention - limited upside

The 3 months correlation between ATT and Canadian is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and Canadian Palladium Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Palladium 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 Canadian Palladium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian Palladium has no effect on the direction of ATT i.e., ATT and Canadian Palladium go up and down completely randomly.

Pair Corralation between ATT and Canadian Palladium

Taking into account the 90-day investment horizon ATT Inc is expected to generate 0.1 times more return on investment than Canadian Palladium. However, ATT Inc is 10.27 times less risky than Canadian Palladium. It trades about 0.19 of its potential returns per unit of risk. Canadian Palladium Resources is currently generating about -0.02 per unit of risk. If you would invest  2,017  in ATT Inc on August 31, 2024 and sell it today you would earn a total of  310.00  from holding ATT Inc or generate 15.37% return on investment over 90 days.

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

ATT Inc  vs.  Canadian Palladium Resources

ATT Inc

Risk-Adjusted Performance

15 of 100

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

Canadian Palladium

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Canadian Palladium Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with ATT and Canadian Palladium

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

The idea behind ATT Inc and Canadian Palladium Resources 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.