Correlation Between ATT and Nevada King

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

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

Diversification Opportunities for ATT and Nevada King

-0.58

Correlation Coefficient

ATT  Nevada King

Excellent diversification

The 3 months correlation between ATT and Nevada is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and Nevada King Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nevada King Gold 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 Nevada King. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nevada King Gold has no effect on the direction of ATT i.e., ATT and Nevada King go up and down completely randomly.

Pair Corralation between ATT and Nevada King

Taking into account the 90-day investment horizon ATT Inc is expected to generate 0.19 times more return on investment than Nevada King. However, ATT Inc is 5.23 times less risky than Nevada King. It trades about 0.18 of its potential returns per unit of risk. Nevada King Gold is currently generating about -0.01 per unit of risk. If you would invest  2,017  in ATT Inc on September 2, 2024 and sell it today you would earn a total of  299.00  from holding ATT Inc or generate 14.82% return on investment over 90 days.

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

ATT Inc  vs.  Nevada King Gold

ATT Inc

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ATT Inc are ranked lower than 14 (%) 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.

Nevada King Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nevada King Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Nevada King is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with ATT and Nevada King

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

The idea behind ATT Inc and Nevada King Gold 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.