Correlation Between ATT and WELLTOWER

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

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

Diversification Opportunities for ATT and WELLTOWER

-0.58

Correlation Coefficient

ATT  WELLTOWER

Excellent diversification

The 3 months correlation between ATT and WELLTOWER is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and WELLTOWER INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WELLTOWER INC 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 WELLTOWER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WELLTOWER INC has no effect on the direction of ATT i.e., ATT and WELLTOWER go up and down completely randomly.

Pair Corralation between ATT and WELLTOWER

Taking into account the 90-day investment horizon ATT Inc is expected to generate 1.38 times more return on investment than WELLTOWER. However, ATT is 1.38 times more volatile than WELLTOWER INC. It trades about 0.12 of its potential returns per unit of risk. WELLTOWER INC is currently generating about -0.12 per unit of risk. If you would invest  2,137  in ATT Inc on September 13, 2024 and sell it today you would earn a total of  211.00  from holding ATT Inc or generate 9.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.83%
Values	Daily Returns

ATT Inc  vs.  WELLTOWER INC

ATT Inc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ATT Inc are ranked lower than 9 (%) 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.

WELLTOWER INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WELLTOWER INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady 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 WELLTOWER INC investors.

Pair Trading with ATT and WELLTOWER

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

The idea behind ATT Inc and WELLTOWER INC 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.