Correlation Between 278642BB8 and ATT

Can any of the company-specific risk be diversified away by investing in both 278642BB8 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 278642BB8 and ATT into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between EBAY 63 22 NOV 32 and ATT Inc, you can compare the effects of market volatilities on 278642BB8 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 278642BB8 with a short position of ATT. Check out your portfolio center. Please also check ongoing floating volatility patterns of 278642BB8 and ATT.

Diversification Opportunities for 278642BB8 and ATT

0.21

Correlation Coefficient

278642BB8  ATT

Modest diversification

The 3 months correlation between 278642BB8 and ATT is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding EBAY 63 22 NOV 32 and ATT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATT Inc and 278642BB8 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 EBAY 63 22 NOV 32 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 278642BB8 i.e., 278642BB8 and ATT go up and down completely randomly.

Pair Corralation between 278642BB8 and ATT

Assuming the 90 days trading horizon EBAY 63 22 NOV 32 is expected to under-perform the ATT. But the bond apears to be less risky and, when comparing its historical volatility, EBAY 63 22 NOV 32 is 1.84 times less risky than ATT. The bond trades about -0.03 of its potential returns per unit of risk. The ATT Inc is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  2,241  in ATT Inc on December 1, 2024 and sell it today you would earn a total of  500.00  from holding ATT Inc or generate 22.31% return on investment over 90 days.

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

EBAY 63 22 NOV 32  vs.  ATT Inc

EBAY 63 22

Risk-Adjusted Performance

Very Weak

Over the last 90 days EBAY 63 22 NOV 32 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 278642BB8 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 uncertain basic indicators, ATT unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with 278642BB8 and ATT

The main advantage of trading using opposite 278642BB8 and ATT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 278642BB8 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 EBAY 63 22 NOV 32 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.