Correlation Between ATT and ORACLE

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

By analyzing existing cross correlation between ATT Inc and ORACLE P 38, you can compare the effects of market volatilities on ATT and ORACLE 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 ORACLE. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATT and ORACLE.

Diversification Opportunities for ATT and ORACLE

0.25

Correlation Coefficient

ATT  ORACLE

Modest diversification

The 3 months correlation between ATT and ORACLE is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and ORACLE P 38 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ORACLE P 38 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 ORACLE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ORACLE P 38 has no effect on the direction of ATT i.e., ATT and ORACLE go up and down completely randomly.

Pair Corralation between ATT and ORACLE

Taking into account the 90-day investment horizon ATT Inc is expected to generate 1.71 times more return on investment than ORACLE. However, ATT is 1.71 times more volatile than ORACLE P 38. It trades about 0.26 of its potential returns per unit of risk. ORACLE P 38 is currently generating about 0.03 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 Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

ATT Inc  vs.  ORACLE P 38

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.

ORACLE P 38

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ORACLE P 38 are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, ORACLE is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with ATT and ORACLE

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

The idea behind ATT Inc and ORACLE P 38 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.