Correlation Between Adobe Systems and ATT

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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

-0.05
  Correlation Coefficient

Good diversification

The 3 months correlation between Adobe and ATT is -0.05. 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 generate 1.48 times more return on investment than ATT. However, Adobe Systems is 1.48 times more volatile than ATT Inc. It trades about 0.02 of its potential returns per unit of risk. ATT Inc is currently generating about 0.01 per unit of risk. If you would invest  43,444  in Adobe Systems Incorporated on December 30, 2023 and sell it today you would earn a total of  7,016  from holding Adobe Systems Incorporated or generate 16.15% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Adobe Systems Incorporated  vs.  ATT Inc

 Performance 
       Timeline  
Adobe Systems rporated 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Adobe Systems Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental drivers remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.
ATT Inc 

Risk-Adjusted Performance

4 of 100

 
Low
 
High
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in ATT Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, ATT is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

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.
The idea behind Adobe Systems Incorporated 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.
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.

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