Correlation Between ATT and Apple

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

Diversification Opportunities for ATT and Apple

-0.25
  Correlation Coefficient

Very good diversification

The 3 months correlation between ATT and Apple is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple 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 Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of ATT i.e., ATT and Apple go up and down completely randomly.

Pair Corralation between ATT and Apple

Taking into account the 90-day investment horizon ATT Inc is expected to under-perform the Apple. But the stock apears to be less risky and, when comparing its historical volatility, ATT Inc is 1.27 times less risky than Apple. The stock trades about -0.02 of its potential returns per unit of risk. The Apple Inc is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  11,560  in Apple Inc on July 3, 2022 and sell it today you would earn a total of  2,260  from holding Apple Inc or generate 19.55% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

ATT Inc  vs.  Apple Inc

 Performance (%) 
       Timeline  
ATT Inc 
ATT Performance
0 of 100
Over the last 90 days ATT Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in November 2022. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

ATT Price Channel

Apple Inc 
Apple Performance
0 of 100
Over the last 90 days Apple Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively steady basic indicators, Apple is not utilizing all of its potentials. The latest stock price chaos, may contribute to medium-term losses for the stakeholders.

Apple Price Channel

ATT and Apple Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ATT and Apple

The main advantage of trading using opposite ATT and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATT position performs unexpectedly, Apple 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 Apple will offset losses from the drop in Apple's long position.
ATT vs. Amazon Inc
The idea behind ATT Inc and Apple 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.
Apple vs. Amazon Inc
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.

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