Correlation Between ATT and IShares Expanded

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

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

Diversification Opportunities for ATT and IShares Expanded

-0.33

Correlation Coefficient

ATT  IShares Expanded

Very good diversification

The 3 months correlation between ATT and IShares is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and iShares Expanded Tech Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Expanded Tech 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 IShares Expanded. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Expanded Tech has no effect on the direction of ATT i.e., ATT and IShares Expanded go up and down completely randomly.

Pair Corralation between ATT and IShares Expanded

Taking into account the 90-day investment horizon ATT Inc is expected to generate 0.88 times more return on investment than IShares Expanded. However, ATT Inc is 1.13 times less risky than IShares Expanded. It trades about 0.22 of its potential returns per unit of risk. iShares Expanded Tech Software is currently generating about -0.08 per unit of risk. If you would invest  2,267  in ATT Inc on December 26, 2024 and sell it today you would earn a total of  498.00  from holding ATT Inc or generate 21.97% return on investment over 90 days.

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

ATT Inc  vs.  iShares Expanded Tech Software

ATT Inc

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ATT Inc are ranked lower than 17 (%) 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.

iShares Expanded Tech

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares Expanded Tech Software has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Etf's technical and fundamental indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the fund sophisticated investors.

Pair Trading with ATT and IShares Expanded

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

The idea behind ATT Inc and iShares Expanded Tech Software 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.