Correlation Between Cisco Systems and ATT

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

Diversification Opportunities for Cisco Systems and ATT

-0.79
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Cisco and ATT is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and ATT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATT Inc and Cisco 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 Cisco Systems 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 Cisco Systems i.e., Cisco Systems and ATT go up and down completely randomly.

Pair Corralation between Cisco Systems and ATT

Given the investment horizon of 90 days Cisco Systems is expected to generate 2.2 times less return on investment than ATT. In addition to that, Cisco Systems is 1.14 times more volatile than ATT Inc. It trades about 0.01 of its total potential returns per unit of risk. ATT Inc is currently generating about 0.02 per unit of volatility. If you would invest  1,915  in ATT Inc on March 28, 2022 and sell it today you would earn a total of  184.00  from holding ATT Inc or generate 9.61% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Cisco Systems  vs.  ATT Inc

 Performance (%) 
      Timeline 
Cisco Systems 
Cisco Performance
0 of 100
Over the last 90 days Cisco Systems has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in July 2022. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Structure and Payout Changes

Forward Annual Dividend Yield
0.035
Payout Ratio
0.45
Last Split Factor
2:1
Forward Annual Dividend Rate
1.52
Dividend Date
2022-07-27
Ex Dividend Date
2022-07-05
Last Split Date
2000-03-23

Cisco Price Channel

ATT Inc 
ATT Performance
11 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in ATT Inc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, ATT unveiled solid returns over the last few months and may actually be approaching a breakup point.

Structure and Payout Changes

Forward Annual Dividend Yield
0.0556
Payout Ratio
0.56
Last Split Factor
1324:1000
Forward Annual Dividend Rate
1.11
Dividend Date
2022-05-02
Ex Dividend Date
2022-04-13
Last Split Date
2022-04-11

ATT Price Channel

Cisco Systems and ATT Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Cisco Systems and ATT

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

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