Correlation Between ATT and UNITED

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

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

Diversification Opportunities for ATT and UNITED

0.0

Correlation Coefficient

ATT  UNITED

Pay attention - limited upside

The 3 months correlation between ATT and UNITED is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and UNITED PARCEL SERVICE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNITED PARCEL SERVICE 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 UNITED. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNITED PARCEL SERVICE has no effect on the direction of ATT i.e., ATT and UNITED go up and down completely randomly.

Pair Corralation between ATT and UNITED

Taking into account the 90-day investment horizon ATT Inc is expected to generate 0.63 times more return on investment than UNITED. However, ATT Inc is 1.59 times less risky than UNITED. It trades about 0.26 of its potential returns per unit of risk. UNITED PARCEL SERVICE is currently generating about 0.1 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	Flat
Strength	Insignificant
Accuracy	77.05%
Values	Daily Returns

ATT Inc  vs.  UNITED PARCEL SERVICE

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.

UNITED PARCEL SERVICE

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in UNITED PARCEL SERVICE are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, UNITED sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ATT and UNITED

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

The idea behind ATT Inc and UNITED PARCEL SERVICE 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.