Correlation Between ATT and Credit Enhanced

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

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

Diversification Opportunities for ATT and Credit Enhanced

0.57

Correlation Coefficient

ATT  Credit Enhanced

Very weak diversification

The 3 months correlation between ATT and Credit is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and Credit Enhanced Corts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Credit Enhanced Corts 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 Credit Enhanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Credit Enhanced Corts has no effect on the direction of ATT i.e., ATT and Credit Enhanced go up and down completely randomly.

Pair Corralation between ATT and Credit Enhanced

Considering the 90-day investment horizon ATT Inc is expected to generate 0.91 times more return on investment than Credit Enhanced. However, ATT Inc is 1.1 times less risky than Credit Enhanced. It trades about 0.1 of its potential returns per unit of risk. Credit Enhanced Corts is currently generating about 0.06 per unit of risk. If you would invest  2,328  in ATT Inc on November 28, 2024 and sell it today you would earn a total of  58.00  from holding ATT Inc or generate 2.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

ATT Inc  vs.  Credit Enhanced Corts

ATT Inc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ATT Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, ATT is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Credit Enhanced Corts

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Credit Enhanced Corts are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Credit Enhanced is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with ATT and Credit Enhanced

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

The idea behind ATT Inc and Credit Enhanced Corts 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 Commodity Directory module to find actively traded commodities issued by global exchanges.