Correlation Between ATT and 06051GJM2

Can any of the company-specific risk be diversified away by investing in both ATT and 06051GJM2 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 06051GJM2 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ATT Inc and BANK OF AMERICA, you can compare the effects of market volatilities on ATT and 06051GJM2 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 06051GJM2. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATT and 06051GJM2.

Diversification Opportunities for ATT and 06051GJM2

-0.67

Correlation Coefficient

ATT  06051GJM2

Excellent diversification

The 3 months correlation between ATT and 06051GJM2 is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and BANK OF AMERICA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANK 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 06051GJM2. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANK OF AMERICA has no effect on the direction of ATT i.e., ATT and 06051GJM2 go up and down completely randomly.

Pair Corralation between ATT and 06051GJM2

Taking into account the 90-day investment horizon ATT Inc is expected to generate 1.46 times more return on investment than 06051GJM2. However, ATT is 1.46 times more volatile than BANK OF AMERICA. It trades about 0.12 of its potential returns per unit of risk. BANK OF AMERICA is currently generating about -0.1 per unit of risk. If you would invest  2,132  in ATT Inc on September 12, 2024 and sell it today you would earn a total of  216.00  from holding ATT Inc or generate 10.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	92.19%
Values	Daily Returns

ATT Inc  vs.  BANK OF AMERICA

ATT Inc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ATT Inc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, ATT may actually be approaching a critical reversion point that can send shares even higher in January 2025.

BANK OF AMERICA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BANK OF AMERICA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 06051GJM2 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 06051GJM2

The main advantage of trading using opposite ATT and 06051GJM2 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATT position performs unexpectedly, 06051GJM2 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 06051GJM2 will offset losses from the drop in 06051GJM2's long position.

The idea behind ATT Inc and BANK 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.