Correlation Between ATT and American Beacon

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

Diversification Opportunities for ATT and American Beacon

0.36
  Correlation Coefficient

Weak diversification

The 3 months correlation between ATT and American is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and American Beacon Mid-Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Mid-Cap 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 American Beacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Beacon Mid-Cap has no effect on the direction of ATT i.e., ATT and American Beacon go up and down completely randomly.

Pair Corralation between ATT and American Beacon

Taking into account the 90-day investment horizon ATT is expected to generate 4.22 times less return on investment than American Beacon. But when comparing it to its historical volatility, ATT Inc is 1.62 times less risky than American Beacon. It trades about 0.01 of its potential returns per unit of risk. American Beacon Mid-Cap is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,068  in American Beacon Mid-Cap on August 29, 2022 and sell it today you would earn a total of  149.00  from holding American Beacon Mid-Cap or generate 13.95% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy98.8%
ValuesDaily Returns

ATT Inc  vs.  American Beacon Mid-Cap

 Performance (%) 
       Timeline  
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

American Beacon Mid-Cap 
American Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in American Beacon Mid-Cap are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, American Beacon may actually be approaching a critical reversion point that can send shares even higher in December 2022.

American Price Channel

ATT and American Beacon Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ATT and American Beacon

The main advantage of trading using opposite ATT and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATT position performs unexpectedly, American Beacon 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 American Beacon will offset losses from the drop in American Beacon's long position.
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The idea behind ATT Inc and American Beacon Mid-Cap 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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