Correlation Between Target and ATT
Can any of the company-specific risk be diversified away by investing in both Target 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 Target and ATT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Target and ATT Inc, you can compare the effects of market volatilities on Target 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 Target with a short position of ATT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Target and ATT.
Diversification Opportunities for Target and ATT
Average diversification
The 3 months correlation between Target and ATT is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Target and ATT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATT Inc and Target 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 Target 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 Target i.e., Target and ATT go up and down completely randomly.
Pair Corralation between Target and ATT
Considering the 90-day investment horizon Target is expected to generate 1.82 times more return on investment than ATT. However, Target is 1.82 times more volatile than ATT Inc. It trades about 0.16 of its potential returns per unit of risk. ATT Inc is currently generating about 0.0 per unit of risk. If you would invest 13,818 in Target on January 24, 2024 and sell it today you would earn a total of 2,893 from holding Target or generate 20.94% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Target vs. ATT Inc
Performance |
Timeline |
Target |
ATT Inc |
Target and ATT Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Target and ATT
The main advantage of trading using opposite Target and ATT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Target 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.Target vs. Big Lots | Target vs. Aquagold International | Target vs. Thrivent High Yield | Target vs. Morningstar Unconstrained Allocation |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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