Correlation Between Adobe Systems and ATT
Can any of the company-specific risk be diversified away by investing in both Adobe Systems 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 Adobe Systems and ATT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adobe Systems Incorporated and ATT Inc, you can compare the effects of market volatilities on Adobe Systems 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 Adobe Systems with a short position of ATT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adobe Systems and ATT.
Diversification Opportunities for Adobe Systems and ATT
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Adobe and ATT is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Adobe Systems Incorporated and ATT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATT Inc and Adobe Systems 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 Adobe Systems Incorporated 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 Adobe Systems i.e., Adobe Systems and ATT go up and down completely randomly.
Pair Corralation between Adobe Systems and ATT
Given the investment horizon of 90 days Adobe Systems Incorporated is expected to under-perform the ATT. But the stock apears to be less risky and, when comparing its historical volatility, Adobe Systems Incorporated is 1.02 times less risky than ATT. The stock trades about -0.44 of its potential returns per unit of risk. The ATT Inc is currently generating about -0.16 of returns per unit of risk over similar time horizon. If you would invest 1,684 in ATT Inc on January 24, 2024 and sell it today you would lose (53.00) from holding ATT Inc or give up 3.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Adobe Systems Incorporated vs. ATT Inc
Performance |
| Timeline |
| Adobe Systems rporated |
| ATT Inc |
Adobe Systems and ATT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adobe Systems and ATT
The main advantage of trading using opposite Adobe Systems and ATT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adobe Systems 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.| Adobe Systems vs. Palo Alto Networks | Adobe Systems vs. Zscaler | Adobe Systems vs. Okta Inc | Adobe Systems vs. MongoDB |
Check out your portfolio center.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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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