Correlation Between ATT and Labrador Iron

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

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

Diversification Opportunities for ATT and Labrador Iron

-0.73

Correlation Coefficient

ATT  Labrador Iron

Pay attention - limited upside

The 3 months correlation between ATT and Labrador is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and Labrador Iron Ore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Labrador Iron Ore 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 Labrador Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Labrador Iron Ore has no effect on the direction of ATT i.e., ATT and Labrador Iron go up and down completely randomly.

Pair Corralation between ATT and Labrador Iron

Taking into account the 90-day investment horizon ATT Inc is expected to under-perform the Labrador Iron. But the stock apears to be less risky and, when comparing its historical volatility, ATT Inc is 1.15 times less risky than Labrador Iron. The stock trades about -0.23 of its potential returns per unit of risk. The Labrador Iron Ore is currently generating about -0.15 of returns per unit of risk over similar time horizon. If you would invest  2,108  in Labrador Iron Ore on October 7, 2024 and sell it today you would lose (80.00) from holding Labrador Iron Ore or give up 3.8% of portfolio value over 90 days.

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

ATT Inc  vs.  Labrador Iron Ore

ATT Inc

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ATT Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, ATT is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Labrador Iron Ore

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Labrador Iron Ore has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with ATT and Labrador Iron

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

The idea behind ATT Inc and Labrador Iron Ore 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 Commodity Directory module to find actively traded commodities issued by global exchanges.