Correlation Between ATT and Hartford Short

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

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

Diversification Opportunities for ATT and Hartford Short

0.77

Correlation Coefficient

ATT  Hartford Short

Poor diversification

The 3 months correlation between ATT and Hartford is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and Hartford Short Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Short Duration 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 Hartford Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Short Duration has no effect on the direction of ATT i.e., ATT and Hartford Short go up and down completely randomly.

Pair Corralation between ATT and Hartford Short

Taking into account the 90-day investment horizon ATT Inc is expected to generate 13.38 times more return on investment than Hartford Short. However, ATT is 13.38 times more volatile than Hartford Short Duration. It trades about 0.22 of its potential returns per unit of risk. Hartford Short Duration is currently generating about 0.17 per unit of risk. If you would invest  2,219  in ATT Inc on December 18, 2024 and sell it today you would earn a total of  464.00  from holding ATT Inc or generate 20.91% return on investment over 90 days.

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

ATT Inc  vs.  Hartford Short Duration

ATT Inc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ATT Inc are ranked lower than 16 (%) 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.

Hartford Short Duration

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hartford Short Duration are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Hartford Short is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with ATT and Hartford Short

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

The idea behind ATT Inc and Hartford Short Duration 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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.