Correlation Between ATT and Macys

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

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

Diversification Opportunities for ATT and Macys

0.12

Correlation Coefficient

ATT  Macys

Average diversification

The 3 months correlation between ATT and Macys is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and Macys Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macys Inc 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 Macys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macys Inc has no effect on the direction of ATT i.e., ATT and Macys go up and down completely randomly.

Pair Corralation between ATT and Macys

Taking into account the 90-day investment horizon ATT Inc is expected to generate 0.37 times more return on investment than Macys. However, ATT Inc is 2.71 times less risky than Macys. It trades about -0.26 of its potential returns per unit of risk. Macys Inc is currently generating about -0.24 per unit of risk. If you would invest  1,689  in ATT Inc on January 19, 2024 and sell it today you would lose (77.00) from holding ATT Inc or give up 4.56% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

ATT Inc  vs.  Macys Inc

ATT Inc

Risk-Adjusted Performance

0 of 100

Very 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 recent stock price uproar, may contribute to short-horizon losses for the private investors.

Macys Inc

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Macys Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, Macys may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with ATT and Macys

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

The idea behind ATT Inc and Macys 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 Stocks Directory module to find actively traded stocks across global markets.