Correlation Between Element Fleet and ATT

Can any of the company-specific risk be diversified away by investing in both Element Fleet 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 Element Fleet and ATT into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Element Fleet Management and ATT Inc, you can compare the effects of market volatilities on Element Fleet 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 Element Fleet with a short position of ATT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Element Fleet and ATT.

Diversification Opportunities for Element Fleet and ATT

0.41

Correlation Coefficient

Element Fleet  ATT

Very weak diversification

The 3 months correlation between Element and ATT is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Element Fleet Management and ATT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATT Inc and Element Fleet 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 Element Fleet Management 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 Element Fleet i.e., Element Fleet and ATT go up and down completely randomly.

Pair Corralation between Element Fleet and ATT

Assuming the 90 days horizon Element Fleet Management is expected to generate 0.94 times more return on investment than ATT. However, Element Fleet Management is 1.07 times less risky than ATT. It trades about -0.07 of its potential returns per unit of risk. ATT Inc is currently generating about -0.09 per unit of risk. If you would invest  1,607  in Element Fleet Management on January 25, 2024 and sell it today you would lose (22.00) from holding Element Fleet Management or give up 1.37% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Element Fleet Management  vs.  ATT Inc

Element Fleet Management

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Element Fleet Management has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Element Fleet is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

ATT Inc

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days ATT Inc has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Pair Trading with Element Fleet and ATT

The main advantage of trading using opposite Element Fleet and ATT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Element Fleet 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 Element Fleet Management 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.