Correlation Between ATT and Pear Tree

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

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

Diversification Opportunities for ATT and Pear Tree

0.67

Correlation Coefficient

ATT  Pear Tree

Poor diversification

The 3 months correlation between ATT and Pear is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and Pear Tree Panagora in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pear Tree Panagora 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 Pear Tree. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pear Tree Panagora has no effect on the direction of ATT i.e., ATT and Pear Tree go up and down completely randomly.

Pair Corralation between ATT and Pear Tree

If you would invest  2,031  in ATT Inc on September 4, 2024 and sell it today you would earn a total of  239.00  from holding ATT Inc or generate 11.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	1.56%
Values	Daily Returns

ATT Inc  vs.  Pear Tree Panagora

ATT Inc

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ATT Inc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, ATT may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pear Tree Panagora

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pear Tree Panagora has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Pear Tree is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with ATT and Pear Tree

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

The idea behind ATT Inc and Pear Tree Panagora 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.