Correlation Between ATT and Dimensional ETF

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

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

Diversification Opportunities for ATT and Dimensional ETF

0.92

Correlation Coefficient

ATT  Dimensional ETF

Almost no diversification

The 3 months correlation between ATT and Dimensional is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and Dimensional ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimensional ETF Trust 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 Dimensional ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimensional ETF Trust has no effect on the direction of ATT i.e., ATT and Dimensional ETF go up and down completely randomly.

Pair Corralation between ATT and Dimensional ETF

Taking into account the 90-day investment horizon ATT Inc is expected to generate 1.74 times more return on investment than Dimensional ETF. However, ATT is 1.74 times more volatile than Dimensional ETF Trust. It trades about 0.26 of its potential returns per unit of risk. Dimensional ETF Trust is currently generating about 0.14 per unit of risk. If you would invest  2,232  in ATT Inc on December 28, 2024 and sell it today you would earn a total of  588.00  from holding ATT Inc or generate 26.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.36%
Values	Daily Returns

ATT Inc  vs.  Dimensional ETF Trust

ATT Inc

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ATT Inc are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, ATT unveiled solid returns over the last few months and may actually be approaching a breakup point.

Dimensional ETF Trust

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dimensional ETF Trust are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal forward indicators, Dimensional ETF may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with ATT and Dimensional ETF

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

The idea behind ATT Inc and Dimensional ETF Trust 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.