Correlation Between ATT and Pacer Lunt

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

Diversification Opportunities for ATT and Pacer Lunt

-0.48

Correlation Coefficient

ATT  Pacer Lunt

Very good diversification

The 3 months correlation between ATT and Pacer is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and Pacer Lunt MidCap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Lunt MidCap 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 Lunt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Lunt MidCap has no effect on the direction of ATT i.e., ATT and Pacer Lunt go up and down completely randomly.

Pair Corralation between ATT and Pacer Lunt

Taking into account the 90-day investment horizon ATT Inc is expected to generate 1.32 times more return on investment than Pacer Lunt. However, ATT is 1.32 times more volatile than Pacer Lunt MidCap. It trades about 0.18 of its potential returns per unit of risk. Pacer Lunt MidCap is currently generating about -0.19 per unit of risk. If you would invest  2,254  in ATT Inc on December 17, 2024 and sell it today you would earn a total of  404.00  from holding ATT Inc or generate 17.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

ATT Inc  vs.  Pacer Lunt MidCap

ATT Inc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ATT Inc are ranked lower than 14 (%) 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 Lunt MidCap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pacer Lunt MidCap has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Etf's primary indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the fund shareholders.

Pair Trading with ATT and Pacer Lunt

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

The idea behind ATT Inc and Pacer Lunt MidCap 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.