Correlation Between International Business and ATT
Can any of the company-specific risk be diversified away by investing in both International Business 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 International Business and ATT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Business Machines and ATT Inc, you can compare the effects of market volatilities on International Business 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 International Business with a short position of ATT. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Business and ATT.
Diversification Opportunities for International Business and ATT
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between International and ATT is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding International Business Machine and ATT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATT Inc and International Business 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 International Business Machines 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 International Business i.e., International Business and ATT go up and down completely randomly.
Pair Corralation between International Business and ATT
Considering the 90-day investment horizon International Business Machines is expected to under-perform the ATT. In addition to that, International Business is 2.02 times more volatile than ATT Inc. It trades about -0.3 of its total potential returns per unit of risk. ATT Inc is currently generating about -0.19 per unit of volatility. If you would invest 1,727 in ATT Inc on January 27, 2024 and sell it today you would lose (69.00) from holding ATT Inc or give up 4.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Business Machine vs. ATT Inc
Performance |
| Timeline |
| International Business |
| ATT Inc |
International Business and ATT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Business and ATT
The main advantage of trading using opposite International Business and ATT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Business 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.| International Business vs. EPAM Systems | International Business vs. Infosys Ltd ADR | International Business vs. Cognizant Technology Solutions | International Business vs. FiscalNote Holdings |
| ATT vs. Aquagold International | ATT vs. Xponential Fitness | ATT vs. Tilray Inc | ATT vs. Vanguard Small Cap Growth |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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