Correlation Between ATT and KEYCORP

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

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

Diversification Opportunities for ATT and KEYCORP

-0.44

Correlation Coefficient

ATT  KEYCORP

Very good diversification

The 3 months correlation between ATT and KEYCORP is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and KEYCORP MTN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KEYCORP MTN 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 KEYCORP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KEYCORP MTN has no effect on the direction of ATT i.e., ATT and KEYCORP go up and down completely randomly.

Pair Corralation between ATT and KEYCORP

Taking into account the 90-day investment horizon ATT Inc is expected to generate 0.55 times more return on investment than KEYCORP. However, ATT Inc is 1.83 times less risky than KEYCORP. It trades about 0.08 of its potential returns per unit of risk. KEYCORP MTN is currently generating about -0.07 per unit of risk. If you would invest  2,109  in ATT Inc on September 19, 2024 and sell it today you would earn a total of  139.00  from holding ATT Inc or generate 6.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

ATT Inc  vs.  KEYCORP MTN

ATT Inc

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ATT Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, ATT may actually be approaching a critical reversion point that can send shares even higher in January 2025.

KEYCORP MTN

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KEYCORP MTN has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for KEYCORP MTN investors.

Pair Trading with ATT and KEYCORP

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

The idea behind ATT Inc and KEYCORP MTN 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.