Correlation Between ATT and IShares Paris

Can any of the company-specific risk be diversified away by investing in both ATT and IShares Paris 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 Paris 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 Paris Aligned Climate, you can compare the effects of market volatilities on ATT and IShares Paris 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 Paris. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATT and IShares Paris.

Diversification Opportunities for ATT and IShares Paris

0.94

Correlation Coefficient

ATT  IShares Paris

Almost no diversification

The 3 months correlation between ATT and IShares is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and iShares Paris Aligned Climate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Paris Aligned 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 Paris. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Paris Aligned has no effect on the direction of ATT i.e., ATT and IShares Paris go up and down completely randomly.

Pair Corralation between ATT and IShares Paris

Taking into account the 90-day investment horizon ATT Inc is expected to generate 1.74 times more return on investment than IShares Paris. However, ATT is 1.74 times more volatile than iShares Paris Aligned Climate. It trades about 0.22 of its potential returns per unit of risk. iShares Paris Aligned Climate is currently generating about 0.12 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 Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

ATT Inc  vs.  iShares Paris Aligned Climate

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 Paris Aligned

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Paris Aligned Climate are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental drivers, IShares Paris may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with ATT and IShares Paris

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

The idea behind ATT Inc and iShares Paris Aligned Climate 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.