Correlation Between ATT and Fanuc

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

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

Diversification Opportunities for ATT and Fanuc

-0.54

Correlation Coefficient

ATT  Fanuc

Excellent diversification

The 3 months correlation between ATT and Fanuc is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and Fanuc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fanuc 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 Fanuc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fanuc has no effect on the direction of ATT i.e., ATT and Fanuc go up and down completely randomly.

Pair Corralation between ATT and Fanuc

Taking into account the 90-day investment horizon ATT Inc is expected to generate 0.59 times more return on investment than Fanuc. However, ATT Inc is 1.69 times less risky than Fanuc. It trades about 0.24 of its potential returns per unit of risk. Fanuc is currently generating about -0.07 per unit of risk. If you would invest  2,202  in ATT Inc on August 31, 2024 and sell it today you would earn a total of  125.00  from holding ATT Inc or generate 5.68% return on investment over 90 days.

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

ATT Inc  vs.  Fanuc

ATT Inc

Risk-Adjusted Performance

15 of 100

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

Fanuc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fanuc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with ATT and Fanuc

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

The idea behind ATT Inc and Fanuc 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.