Correlation Between 126650DT4 and ATT

Can any of the company-specific risk be diversified away by investing in both 126650DT4 and ATT 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 126650DT4 and ATT into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CVS 5125 21 FEB 30 and ATT Inc, you can compare the effects of market volatilities on 126650DT4 and ATT 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 126650DT4 with a short position of ATT. Check out your portfolio center. Please also check ongoing floating volatility patterns of 126650DT4 and ATT.

Diversification Opportunities for 126650DT4 and ATT

0.42

Correlation Coefficient

126650DT4  ATT

Very weak diversification

The 3 months correlation between 126650DT4 and ATT is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding CVS 5125 21 FEB 30 and ATT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATT Inc and 126650DT4 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 CVS 5125 21 FEB 30 are associated (or correlated) with ATT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATT Inc has no effect on the direction of 126650DT4 i.e., 126650DT4 and ATT go up and down completely randomly.

Pair Corralation between 126650DT4 and ATT

Assuming the 90 days trading horizon 126650DT4 is expected to generate 21.57 times less return on investment than ATT. But when comparing it to its historical volatility, CVS 5125 21 FEB 30 is 1.75 times less risky than ATT. It trades about 0.02 of its potential returns per unit of risk. ATT Inc is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  2,232  in ATT Inc on December 30, 2024 and sell it today you would earn a total of  586.00  from holding ATT Inc or generate 26.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

CVS 5125 21 FEB 30  vs.  ATT Inc

CVS 5125 21

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CVS 5125 21 FEB 30 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, 126650DT4 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

ATT Inc

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ATT Inc are ranked lower than 19 (%) 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.

Pair Trading with 126650DT4 and ATT

The main advantage of trading using opposite 126650DT4 and ATT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 126650DT4 position performs unexpectedly, ATT 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 ATT will offset losses from the drop in ATT's long position.

The idea behind CVS 5125 21 FEB 30 and ATT 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.