Correlation Between ATT and BTX Old

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

Diversification Opportunities for ATT and BTX Old

0.85
  Correlation Coefficient

Very poor diversification

The 3 months correlation between ATT and BTX Old is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and BTX Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BTX Old 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 BTX Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BTX Old has no effect on the direction of ATT i.e., ATT and BTX Old go up and down completely randomly.

Pair Corralation between ATT and BTX Old

Taking into account the 90-day investment horizon ATT is expected to generate 422.04 times less return on investment than BTX Old. But when comparing it to its historical volatility, ATT Inc is 31.07 times less risky than BTX Old. It trades about 0.0 of its potential returns per unit of risk. BTX Old is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  219.00  in BTX Old on September 7, 2022 and sell it today you would earn a total of  111.00  from holding BTX Old or generate 50.68% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy98.99%
ValuesDaily Returns

ATT Inc  vs.  BTX Old

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

ATT Price Channel

BTX Old 
BTX Old Performance
0 of 100
Over the last 90 days BTX Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly unsteady basic indicators, BTX Old showed solid returns over the last few months and may actually be approaching a breakup point.

ATT and BTX Old Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ATT and BTX Old

The main advantage of trading using opposite ATT and BTX Old positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATT position performs unexpectedly, BTX Old 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 BTX Old will offset losses from the drop in BTX Old's long position.
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The idea behind ATT Inc and BTX Old 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

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