Correlation Between ATT and Data Storage

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

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

Diversification Opportunities for ATT and Data Storage

-0.68

Correlation Coefficient

ATT  Data Storage

Excellent diversification

The 3 months correlation between ATT and Data is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and Data Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Data Storage 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 Data Storage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Data Storage has no effect on the direction of ATT i.e., ATT and Data Storage go up and down completely randomly.

Pair Corralation between ATT and Data Storage

Taking into account the 90-day investment horizon ATT Inc is expected to generate 0.14 times more return on investment than Data Storage. However, ATT Inc is 7.28 times less risky than Data Storage. It trades about 0.2 of its potential returns per unit of risk. Data Storage is currently generating about -0.03 per unit of risk. If you would invest  2,255  in ATT Inc on December 22, 2024 and sell it today you would earn a total of  447.00  from holding ATT Inc or generate 19.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	85.25%
Values	Daily Returns

ATT Inc  vs.  Data Storage

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

Data Storage

Risk-Adjusted Performance

Very Weak

Over the last 90 days Data Storage has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with ATT and Data Storage

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

The idea behind ATT Inc and Data Storage 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.