Correlation Between ATT and Advance Auto

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

Diversification Opportunities for ATT and Advance Auto

-0.27
  Correlation Coefficient

Very good diversification

The 3 months correlation between ATT and Advance is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and Advance Auto Parts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advance Auto Parts 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 Advance Auto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advance Auto Parts has no effect on the direction of ATT i.e., ATT and Advance Auto go up and down completely randomly.

Pair Corralation between ATT and Advance Auto

Taking into account the 90-day investment horizon ATT Inc is expected to under-perform the Advance Auto. In addition to that, ATT is 1.17 times more volatile than Advance Auto Parts. It trades about -0.27 of its total potential returns per unit of risk. Advance Auto Parts is currently generating about 0.2 per unit of volatility. If you would invest  18,871  in Advance Auto Parts on May 16, 2022 and sell it today you would earn a total of  1,382  from holding Advance Auto Parts or generate 7.32% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

ATT Inc  vs.  Advance Auto Parts

 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 latest sluggish performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

ATT Price Channel

Advance Auto Parts 
Advance Performance
0 of 100
Over the last 90 days Advance Auto Parts has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Advance Auto is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the insiders.

Advance Price Channel

ATT and Advance Auto Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ATT and Advance Auto

The main advantage of trading using opposite ATT and Advance Auto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATT position performs unexpectedly, Advance Auto 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 Advance Auto will offset losses from the drop in Advance Auto's long position.
The idea behind ATT Inc and Advance Auto Parts 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.

Other Complementary Tools

Content Syndication
Quickly integrate customizable finance content to your own investment portal
Go
Portfolio Holdings
Check your current holdings and cash postion to detemine if your portfolio needs rebalancing
Go
Portfolio Comparator
Compare the composition, asset allocations and performance of any two portfolios in your account
Go
Portfolio Anywhere
Track or share privately all of your investments from the convenience of any device
Go
Bond Analysis
Evaluate and analyze corporate bonds as a potential investment for your portfolios.
Go