Correlation Between ATT and BIOGEN

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

By analyzing existing cross correlation between ATT Inc and BIOGEN INC 405, you can compare the effects of market volatilities on ATT and BIOGEN 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 BIOGEN. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATT and BIOGEN.

Diversification Opportunities for ATT and BIOGEN

-0.42

Correlation Coefficient

ATT  BIOGEN

Very good diversification

The 3 months correlation between ATT and BIOGEN is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and BIOGEN INC 405 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BIOGEN INC 405 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 BIOGEN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BIOGEN INC 405 has no effect on the direction of ATT i.e., ATT and BIOGEN go up and down completely randomly.

Pair Corralation between ATT and BIOGEN

Taking into account the 90-day investment horizon ATT Inc is expected to generate 4.74 times more return on investment than BIOGEN. However, ATT is 4.74 times more volatile than BIOGEN INC 405. It trades about 0.12 of its potential returns per unit of risk. BIOGEN INC 405 is currently generating about -0.09 per unit of risk. If you would invest  2,137  in ATT Inc on September 13, 2024 and sell it today you would earn a total of  211.00  from holding ATT Inc or generate 9.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.83%
Values	Daily Returns

ATT Inc  vs.  BIOGEN INC 405

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 uncertain basic indicators, ATT may actually be approaching a critical reversion point that can send shares even higher in January 2025.

BIOGEN INC 405

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BIOGEN INC 405 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, BIOGEN 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 BIOGEN

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

The idea behind ATT Inc and BIOGEN INC 405 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.