Correlation Between ATT and Victory Supermarket

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

Diversification Opportunities for ATT and Victory Supermarket

0.44
  Correlation Coefficient

Very weak diversification

The 3 months correlation between ATT and Victory is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and Victory Supermarket Chain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victory Supermarket Chain and ATT 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 ATT Inc are associated (or correlated) with Victory Supermarket. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victory Supermarket Chain has no effect on the direction of ATT i.e., ATT and Victory Supermarket go up and down completely randomly.

Pair Corralation between ATT and Victory Supermarket

Taking into account the 90-day investment horizon ATT is expected to generate 2.8 times less return on investment than Victory Supermarket. But when comparing it to its historical volatility, ATT Inc is 2.14 times less risky than Victory Supermarket. It trades about 0.21 of its potential returns per unit of risk. Victory Supermarket Chain is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  445,700  in Victory Supermarket Chain on December 29, 2023 and sell it today you would earn a total of  41,700  from holding Victory Supermarket Chain or generate 9.36% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy77.27%
ValuesDaily Returns

ATT Inc  vs.  Victory Supermarket Chain

 Performance 
       Timeline  
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 fragile basic indicators, ATT may actually be approaching a critical reversion point that can send shares even higher in April 2024.
Victory Supermarket Chain 

Risk-Adjusted Performance

23 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Victory Supermarket Chain are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Victory Supermarket sustained solid returns over the last few months and may actually be approaching a breakup point.

ATT and Victory Supermarket Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ATT and Victory Supermarket

The main advantage of trading using opposite ATT and Victory Supermarket positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATT position performs unexpectedly, Victory Supermarket 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 Victory Supermarket will offset losses from the drop in Victory Supermarket's long position.
The idea behind ATT Inc and Victory Supermarket Chain 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.

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