Correlation Between ATT and 12674TAA4

Can any of the company-specific risk be diversified away by investing in both ATT and 12674TAA4 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 12674TAA4 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ATT Inc and CW Senior Financing, you can compare the effects of market volatilities on ATT and 12674TAA4 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 12674TAA4. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATT and 12674TAA4.

Diversification Opportunities for ATT and 12674TAA4

-0.31

Correlation Coefficient

ATT  12674TAA4

Very good diversification

The 3 months correlation between ATT and 12674TAA4 is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and CW Senior Financing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CW Senior Financing 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 12674TAA4. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CW Senior Financing has no effect on the direction of ATT i.e., ATT and 12674TAA4 go up and down completely randomly.

Pair Corralation between ATT and 12674TAA4

Taking into account the 90-day investment horizon ATT Inc is expected to generate 0.74 times more return on investment than 12674TAA4. However, ATT Inc is 1.34 times less risky than 12674TAA4. It trades about -0.01 of its potential returns per unit of risk. CW Senior Financing is currently generating about -0.21 per unit of risk. If you would invest  2,299  in ATT Inc on September 18, 2024 and sell it today you would lose (15.00) from holding ATT Inc or give up 0.65% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	80.0%
Values	Daily Returns

ATT Inc  vs.  CW Senior Financing

ATT Inc

Risk-Adjusted Performance

6 of 100

Modest

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.

CW Senior Financing

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days CW Senior Financing has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for CW Senior Financing investors.

Pair Trading with ATT and 12674TAA4

The main advantage of trading using opposite ATT and 12674TAA4 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATT position performs unexpectedly, 12674TAA4 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 12674TAA4 will offset losses from the drop in 12674TAA4's long position.

The idea behind ATT Inc and CW Senior Financing 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.