Correlation Between Aerojet Rocketdyne and ATT

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

Diversification Opportunities for Aerojet Rocketdyne and ATT

0.94
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Aerojet and ATT is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Aerojet Rocketdyne Holdings and ATT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATT Inc and Aerojet Rocketdyne 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 Aerojet Rocketdyne Holdings 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 Aerojet Rocketdyne i.e., Aerojet Rocketdyne and ATT go up and down completely randomly.

Pair Corralation between Aerojet Rocketdyne and ATT

Given the investment horizon of 90 days Aerojet Rocketdyne Holdings is expected to generate 1.38 times more return on investment than ATT. However, Aerojet Rocketdyne is 1.38 times more volatile than ATT Inc. It trades about 0.04 of its potential returns per unit of risk. ATT Inc is currently generating about 0.01 per unit of risk. If you would invest  3,710  in Aerojet Rocketdyne Holdings on August 28, 2022 and sell it today you would earn a total of  1,389  from holding Aerojet Rocketdyne Holdings or generate 37.44% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Aerojet Rocketdyne Holdings  vs.  ATT Inc

 Performance (%) 
       Timeline  
Aerojet Rocketdyne 
Aerojet Performance
9 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Aerojet Rocketdyne Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Aerojet Rocketdyne exhibited solid returns over the last few months and may actually be approaching a breakup point.

Aerojet Price Channel

ATT Inc 
ATT Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in ATT Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, ATT may actually be approaching a critical reversion point that can send shares even higher in December 2022.

ATT Price Channel

Aerojet Rocketdyne and ATT Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Aerojet Rocketdyne and ATT

The main advantage of trading using opposite Aerojet Rocketdyne and ATT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aerojet Rocketdyne 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.
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The idea behind Aerojet Rocketdyne Holdings 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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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.

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