Correlation Between Inter Industries and ATT
Can any of the company-specific risk be diversified away by investing in both Inter Industries 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 Inter Industries and ATT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Inter Industries and ATT Inc, you can compare the effects of market volatilities on Inter Industries 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 Inter Industries with a short position of ATT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inter Industries and ATT.
Diversification Opportunities for Inter Industries and ATT
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Inter and ATT is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Inter Industries and ATT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATT Inc and Inter Industries 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 Inter Industries 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 Inter Industries i.e., Inter Industries and ATT go up and down completely randomly.
Pair Corralation between Inter Industries and ATT
Assuming the 90 days trading horizon Inter Industries is expected to generate 3.54 times more return on investment than ATT. However, Inter Industries is 3.54 times more volatile than ATT Inc. It trades about 0.28 of its potential returns per unit of risk. ATT Inc is currently generating about -0.09 per unit of risk. If you would invest 24,910 in Inter Industries on January 24, 2024 and sell it today you would earn a total of 4,100 from holding Inter Industries or generate 16.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 80.95% |
| Values | Daily Returns |
Inter Industries vs. ATT Inc
Performance |
| Timeline |
| Inter Industries |
| ATT Inc |
Inter Industries and ATT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inter Industries and ATT
The main advantage of trading using opposite Inter Industries and ATT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inter Industries 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.| Inter Industries vs. C Mer Industries | Inter Industries vs. Ralco Agencies | Inter Industries vs. Brimag L |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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