Correlation Between Microsoft Corp and ATT

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Microsoft Corp 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 Microsoft Corp and ATT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft Corp and ATT Inc, you can compare the effects of market volatilities on Microsoft Corp 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 Microsoft Corp with a short position of ATT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft Corp and ATT.

Diversification Opportunities for Microsoft Corp and ATT

-0.66
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Microsoft and ATT is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft Corp and ATT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATT Inc and Microsoft Corp 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 Microsoft Corp 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 Microsoft Corp i.e., Microsoft Corp and ATT go up and down completely randomly.

Pair Corralation between Microsoft Corp and ATT

Given the investment horizon of 90 days Microsoft Corp is expected to generate 1.25 times more return on investment than ATT. However, Microsoft Corp is 1.25 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 0.02 per unit of risk. If you would invest  20,342  in Microsoft Corp on April 4, 2022 and sell it today you would earn a total of  5,616  from holding Microsoft Corp or generate 27.61% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Microsoft Corp  vs.  ATT Inc

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

Structure and Payout Changes

Forward Annual Dividend Yield
0.0096
Payout Ratio
0.26
Last Split Factor
2:1
Forward Annual Dividend Rate
2.48
Dividend Date
2022-06-09
Ex Dividend Date
2022-08-17
Last Split Date
2003-02-18

Microsoft Price Channel

ATT Inc 
ATT Performance
11 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in ATT Inc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, ATT unveiled solid returns over the last few months and may actually be approaching a breakup point.

Structure and Payout Changes

Forward Annual Dividend Yield
0.0521
Payout Ratio
0.48
Last Split Factor
1324:1000
Forward Annual Dividend Rate
1.11
Dividend Date
2022-08-01
Ex Dividend Date
2022-07-08
Last Split Date
2022-04-11

ATT Price Channel

Microsoft Corp and ATT Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Microsoft Corp and ATT

The main advantage of trading using opposite Microsoft Corp and ATT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft Corp 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 Microsoft Corp 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.

Other Complementary Tools

Focused Opportunities
Build portfolios using our predefined set of ideas and optimize them against your investing preferences
Go
Alpha Finder
Use alpha and beta coefficients to find investment opportunities after accounting for the risk
Go
Money Flow Index
Determine momentum by analyzing Money Flow Index and other technical indicators
Go
Idea Optimizer
Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio
Go
Efficient Frontier
Plot and analyze your portfolio and positions against risk-return landscape of the market.
Go
Analyst Recommendations
Analyst recommendations and target price estimates broken down by several categories
Go
Price Ceiling Movement
Calculate and plot Price Ceiling Movement for different equity instruments
Go