Correlation Between ATT and Vanguard Intermediate

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

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

Diversification Opportunities for ATT and Vanguard Intermediate

0.94

Correlation Coefficient

ATT  Vanguard Intermediate

Almost no diversification

The 3 months correlation between ATT and Vanguard is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and Vanguard Intermediate Term Cor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Intermediate 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 Vanguard Intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Intermediate has no effect on the direction of ATT i.e., ATT and Vanguard Intermediate go up and down completely randomly.

Pair Corralation between ATT and Vanguard Intermediate

Taking into account the 90-day investment horizon ATT Inc is expected to generate 5.28 times more return on investment than Vanguard Intermediate. However, ATT is 5.28 times more volatile than Vanguard Intermediate Term Corporate. It trades about 0.24 of its potential returns per unit of risk. Vanguard Intermediate Term Corporate is currently generating about 0.12 per unit of risk. If you would invest  2,257  in ATT Inc on December 27, 2024 and sell it today you would earn a total of  563.00  from holding ATT Inc or generate 24.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.36%
Values	Daily Returns

ATT Inc  vs.  Vanguard Intermediate Term Cor

ATT Inc

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ATT Inc are ranked lower than 18 (%) 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.

Vanguard Intermediate

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Intermediate Term Corporate are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable forward indicators, Vanguard Intermediate is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with ATT and Vanguard Intermediate

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

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