Correlation Between ATT and RiverFront Dynamic

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

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

Diversification Opportunities for ATT and RiverFront Dynamic

0.38

Correlation Coefficient

ATT  RiverFront Dynamic

Weak diversification

The 3 months correlation between ATT and RiverFront is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and RiverFront Dynamic Flex Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RiverFront Dynamic Flex 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 RiverFront Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RiverFront Dynamic Flex has no effect on the direction of ATT i.e., ATT and RiverFront Dynamic go up and down completely randomly.

Pair Corralation between ATT and RiverFront Dynamic

Taking into account the 90-day investment horizon ATT Inc is expected to generate 0.83 times more return on investment than RiverFront Dynamic. However, ATT Inc is 1.21 times less risky than RiverFront Dynamic. It trades about 0.94 of its potential returns per unit of risk. RiverFront Dynamic Flex Cap is currently generating about -0.21 per unit of risk. If you would invest  2,425  in ATT Inc on December 3, 2024 and sell it today you would earn a total of  348.00  from holding ATT Inc or generate 14.35% return on investment over 90 days.

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

ATT Inc  vs.  RiverFront Dynamic Flex Cap

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 uncertain basic indicators, ATT unveiled solid returns over the last few months and may actually be approaching a breakup point.

RiverFront Dynamic Flex

Risk-Adjusted Performance

Very Weak

Over the last 90 days RiverFront Dynamic Flex Cap has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, RiverFront Dynamic is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with ATT and RiverFront Dynamic

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

The idea behind ATT Inc and RiverFront Dynamic Flex Cap 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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.