Correlation Between ATT and TravelCenters

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Can any of the company-specific risk be diversified away by investing in both ATT and TravelCenters 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 TravelCenters into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ATT Inc and TravelCenters Of America, you can compare the effects of market volatilities on ATT and TravelCenters 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 TravelCenters. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATT and TravelCenters.

Diversification Opportunities for ATT and TravelCenters

ATTTravelCentersDiversified AwayATTTravelCentersDiversified Away100%
0.76
  Correlation Coefficient

Poor diversification

The 3 months correlation between ATT and TravelCenters is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and TravelCenters Of America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TravelCenters Of America 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 TravelCenters. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TravelCenters Of America has no effect on the direction of ATT i.e., ATT and TravelCenters go up and down completely randomly.

Pair Corralation between ATT and TravelCenters

If you would invest  2,150  in ATT Inc on September 17, 2024 and sell it today you would earn a total of  134.00  from holding ATT Inc or generate 6.23% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy1.54%
ValuesDaily Returns

ATT Inc  vs.  TravelCenters Of America

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec 0510
JavaScript chart by amCharts 3.21.15T TANNI
       Timeline  
ATT Inc 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in ATT Inc are ranked lower than 6 (%) 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.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec2121.52222.52323.524
TravelCenters Of America 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days TravelCenters Of America has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, TravelCenters is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

ATT and TravelCenters Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-4.11-3.08-2.05-1.010.011.12.193.294.38 12345
JavaScript chart by amCharts 3.21.15T TANNI
       Returns  

Pair Trading with ATT and TravelCenters

The main advantage of trading using opposite ATT and TravelCenters positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATT position performs unexpectedly, TravelCenters 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 TravelCenters will offset losses from the drop in TravelCenters' long position.
The idea behind ATT Inc and TravelCenters Of America 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

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