Correlation Between ATT and Pacer Benchmark

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

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

Diversification Opportunities for ATT and Pacer Benchmark

-0.72

Correlation Coefficient

ATT  Pacer Benchmark

Pay attention - limited upside

The 3 months correlation between ATT and Pacer is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and Pacer Benchmark Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Benchmark Indu 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 Pacer Benchmark. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Benchmark Indu has no effect on the direction of ATT i.e., ATT and Pacer Benchmark go up and down completely randomly.

Pair Corralation between ATT and Pacer Benchmark

Taking into account the 90-day investment horizon ATT Inc is expected to generate 1.32 times more return on investment than Pacer Benchmark. However, ATT is 1.32 times more volatile than Pacer Benchmark Industrial. It trades about 0.16 of its potential returns per unit of risk. Pacer Benchmark Industrial is currently generating about -0.15 per unit of risk. If you would invest  2,150  in ATT Inc on September 5, 2024 and sell it today you would earn a total of  203.00  from holding ATT Inc or generate 9.44% return on investment over 90 days.

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

ATT Inc  vs.  Pacer Benchmark Industrial

ATT Inc

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ATT Inc are ranked lower than 13 (%) 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.

Pacer Benchmark Indu

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pacer Benchmark Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Etf's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

Pair Trading with ATT and Pacer Benchmark

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

The idea behind ATT Inc and Pacer Benchmark Industrial 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.