Correlation Between Nippon Telegraph and ATT
Can any of the company-specific risk be diversified away by investing in both Nippon Telegraph 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 Nippon Telegraph and ATT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nippon Telegraph Telephone and ATT Inc, you can compare the effects of market volatilities on Nippon Telegraph 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 Nippon Telegraph with a short position of ATT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nippon Telegraph and ATT.
Diversification Opportunities for Nippon Telegraph and ATT
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Nippon and ATT is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Nippon Telegraph Telephone and ATT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATT Inc and Nippon Telegraph 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 Nippon Telegraph Telephone 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 Nippon Telegraph i.e., Nippon Telegraph and ATT go up and down completely randomly.
Pair Corralation between Nippon Telegraph and ATT
Assuming the 90 days horizon Nippon Telegraph Telephone is expected to under-perform the ATT. In addition to that, Nippon Telegraph is 2.61 times more volatile than ATT Inc. It trades about -0.22 of its total potential returns per unit of risk. ATT Inc is currently generating about -0.12 per unit of volatility. If you would invest 1,693 in ATT Inc on January 20, 2024 and sell it today you would lose (42.00) from holding ATT Inc or give up 2.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Nippon Telegraph Telephone vs. ATT Inc
Performance |
| Timeline |
| Nippon Telegraph Tel |
| ATT Inc |
Nippon Telegraph and ATT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nippon Telegraph and ATT
The main advantage of trading using opposite Nippon Telegraph and ATT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nippon Telegraph 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.| Nippon Telegraph vs. Radcom | Nippon Telegraph vs. FingerMotion | Nippon Telegraph vs. KORE Group Holdings | Nippon Telegraph vs. Consolidated Communications |
| ATT vs. Grab Holdings | ATT vs. Cadence Design Systems | ATT vs. Aquagold International | ATT vs. Thrivent High Yield |
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 the Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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