Correlation Between 05523RAE7 and ATT

Can any of the company-specific risk be diversified away by investing in both 05523RAE7 and ATT 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 05523RAE7 and ATT into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BALN 3 15 SEP 50 and ATT Inc, you can compare the effects of market volatilities on 05523RAE7 and ATT 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 05523RAE7 with a short position of ATT. Check out your portfolio center. Please also check ongoing floating volatility patterns of 05523RAE7 and ATT.

Diversification Opportunities for 05523RAE7 and ATT

0.24

Correlation Coefficient

05523RAE7  ATT

Modest diversification

The 3 months correlation between 05523RAE7 and ATT is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding BALN 3 15 SEP 50 and ATT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATT Inc and 05523RAE7 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 BALN 3 15 SEP 50 are associated (or correlated) with ATT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATT Inc has no effect on the direction of 05523RAE7 i.e., 05523RAE7 and ATT go up and down completely randomly.

Pair Corralation between 05523RAE7 and ATT

Assuming the 90 days trading horizon BALN 3 15 SEP 50 is expected to under-perform the ATT. In addition to that, 05523RAE7 is 2.28 times more volatile than ATT Inc. It trades about -0.04 of its total potential returns per unit of risk. ATT Inc is currently generating about 0.18 per unit of volatility. If you would invest  2,017  in ATT Inc on September 2, 2024 and sell it today you would earn a total of  299.00  from holding ATT Inc or generate 14.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	40.63%
Values	Daily Returns

BALN 3 15 SEP 50  vs.  ATT Inc

BALN 3 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BALN 3 15 SEP 50 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain 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 BALN 3 15 SEP 50 investors.

ATT Inc

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ATT Inc are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, ATT unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with 05523RAE7 and ATT

The main advantage of trading using opposite 05523RAE7 and ATT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 05523RAE7 position performs unexpectedly, ATT 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 ATT will offset losses from the drop in ATT's long position.

The idea behind BALN 3 15 SEP 50 and ATT Inc 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.