Correlation Between ATT and KROGER

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

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

Diversification Opportunities for ATT and KROGER

-0.15

Correlation Coefficient

ATT  KROGER

Good diversification

The 3 months correlation between ATT and KROGER is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and KROGER CO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KROGER CO 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 KROGER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KROGER CO has no effect on the direction of ATT i.e., ATT and KROGER go up and down completely randomly.

Pair Corralation between ATT and KROGER

Taking into account the 90-day investment horizon ATT Inc is expected to generate 0.74 times more return on investment than KROGER. However, ATT Inc is 1.35 times less risky than KROGER. It trades about 0.26 of its potential returns per unit of risk. KROGER CO is currently generating about 0.05 per unit of risk. If you would invest  2,232  in ATT Inc on December 29, 2024 and sell it today you would earn a total of  588.00  from holding ATT Inc or generate 26.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	70.49%
Values	Daily Returns

ATT Inc  vs.  KROGER CO

ATT Inc

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ATT Inc are ranked lower than 20 (%) 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.

KROGER CO

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in KROGER CO are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, KROGER is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with ATT and KROGER

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

The idea behind ATT Inc and KROGER CO 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.