Correlation Between ATT and Capital Product

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

By analyzing existing cross correlation between ATT Inc and Capital Product Partners, you can compare the effects of market volatilities on ATT and Capital Product 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 Capital Product. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATT and Capital Product.

Diversification Opportunities for ATT and Capital Product

0.2

Correlation Coefficient

ATT  Capital Product

Modest diversification

The 3 months correlation between ATT and Capital is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and Capital Product Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Product Partners 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 Capital Product. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Product Partners has no effect on the direction of ATT i.e., ATT and Capital Product go up and down completely randomly.

Pair Corralation between ATT and Capital Product

Taking into account the 90-day investment horizon ATT is expected to generate 7.09 times less return on investment than Capital Product. But when comparing it to its historical volatility, ATT Inc is 1.21 times less risky than Capital Product. It trades about 0.0 of its potential returns per unit of risk. Capital Product Partners is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,411  in Capital Product Partners on January 17, 2024 and sell it today you would earn a total of  204.00  from holding Capital Product Partners or generate 14.46% return on investment over 90 days.

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

ATT Inc  vs.  Capital Product Partners

ATT Inc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ATT Inc are ranked lower than 1 (%) 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 recent stock price uproar, may contribute to short-horizon losses for the private investors.

Capital Product Partners

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Capital Product Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest conflicting performance, the Stock's essential indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with ATT and Capital Product

The main advantage of trading using opposite ATT and Capital Product positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATT position performs unexpectedly, Capital Product 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 Capital Product will offset losses from the drop in Capital Product's long position.

The idea behind ATT Inc and Capital Product Partners 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.