Correlation Between ATT and 42704LAA2

Can any of the company-specific risk be diversified away by investing in both ATT and 42704LAA2 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 42704LAA2 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ATT Inc and Herc Holdings 55, you can compare the effects of market volatilities on ATT and 42704LAA2 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 42704LAA2. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATT and 42704LAA2.

Diversification Opportunities for ATT and 42704LAA2

-0.1

Correlation Coefficient

ATT  42704LAA2

Good diversification

The 3 months correlation between ATT and 42704LAA2 is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and Herc Holdings 55 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Herc Holdings 55 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 42704LAA2. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Herc Holdings 55 has no effect on the direction of ATT i.e., ATT and 42704LAA2 go up and down completely randomly.

Pair Corralation between ATT and 42704LAA2

Taking into account the 90-day investment horizon ATT Inc is expected to generate 6.76 times more return on investment than 42704LAA2. However, ATT is 6.76 times more volatile than Herc Holdings 55. It trades about 0.25 of its potential returns per unit of risk. Herc Holdings 55 is currently generating about -0.02 per unit of risk. If you would invest  2,232  in ATT Inc on December 30, 2024 and sell it today you would earn a total of  586.00  from holding ATT Inc or generate 26.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

ATT Inc  vs.  Herc Holdings 55

ATT Inc

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ATT Inc are ranked lower than 19 (%) 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.

Herc Holdings 55

Risk-Adjusted Performance

Very Weak

Over the last 90 days Herc Holdings 55 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 42704LAA2 is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with ATT and 42704LAA2

The main advantage of trading using opposite ATT and 42704LAA2 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATT position performs unexpectedly, 42704LAA2 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 42704LAA2 will offset losses from the drop in 42704LAA2's long position.

The idea behind ATT Inc and Herc Holdings 55 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.

Check out your portfolio center.

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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.