Correlation Between ATT and FIBRA Storage

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

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

Diversification Opportunities for ATT and FIBRA Storage

0.84

Correlation Coefficient

ATT  FIBRA Storage

Very poor diversification

The 3 months correlation between ATT and FIBRA is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and FIBRA Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIBRA Storage 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 FIBRA Storage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FIBRA Storage has no effect on the direction of ATT i.e., ATT and FIBRA Storage go up and down completely randomly.

Pair Corralation between ATT and FIBRA Storage

Given the investment horizon of 90 days ATT Inc is expected to generate 1.26 times more return on investment than FIBRA Storage. However, ATT is 1.26 times more volatile than FIBRA Storage. It trades about 0.15 of its potential returns per unit of risk. FIBRA Storage is currently generating about 0.17 per unit of risk. If you would invest  40,984  in ATT Inc on September 16, 2024 and sell it today you would earn a total of  6,316  from holding ATT Inc or generate 15.41% return on investment over 90 days.

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

ATT Inc  vs.  FIBRA Storage

ATT Inc

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ATT Inc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady primary indicators, ATT showed solid returns over the last few months and may actually be approaching a breakup point.

FIBRA Storage

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FIBRA Storage are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, FIBRA Storage exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ATT and FIBRA Storage

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

The idea behind ATT Inc and FIBRA Storage 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.