Correlation Between Realty Income and ATT

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Can any of the company-specific risk be diversified away by investing in both Realty Income 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 Realty Income and ATT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Realty Income Corp and ATT Inc, you can compare the effects of market volatilities on Realty Income 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 Realty Income with a short position of ATT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Realty Income and ATT.

Diversification Opportunities for Realty Income and ATT

-0.26
  Correlation Coefficient

Very good diversification

The 3 months correlation between Realty and ATT is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Realty Income Corp and ATT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATT Inc and Realty Income 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 Realty Income Corp 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 Realty Income i.e., Realty Income and ATT go up and down completely randomly.

Pair Corralation between Realty Income and ATT

Taking into account the 90-day investment horizon Realty Income Corp is expected to under-perform the ATT. But the stock apears to be less risky and, when comparing its historical volatility, Realty Income Corp is 1.27 times less risky than ATT. The stock trades about -0.02 of its potential returns per unit of risk. The ATT Inc is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,607  in ATT Inc on December 29, 2023 and sell it today you would earn a total of  153.00  from holding ATT Inc or generate 9.52% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Realty Income Corp  vs.  ATT Inc

 Performance 
       Timeline  
Realty me Corp 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Realty Income Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Realty Income is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.
ATT Inc 

Risk-Adjusted Performance

6 of 100

 
Low
 
High
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 April 2024.

Realty Income and ATT Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Realty Income and ATT

The main advantage of trading using opposite Realty Income and ATT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Realty Income 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 Realty Income Corp 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.
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.

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