Correlation Between Vestas Wind and ATT
Can any of the company-specific risk be diversified away by investing in both Vestas Wind 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 Vestas Wind and ATT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vestas Wind Systems and ATT Inc, you can compare the effects of market volatilities on Vestas Wind 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 Vestas Wind with a short position of ATT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vestas Wind and ATT.
Diversification Opportunities for Vestas Wind and ATT
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Vestas and ATT is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Vestas Wind Systems and ATT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATT Inc and Vestas Wind 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 Vestas Wind Systems 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 Vestas Wind i.e., Vestas Wind and ATT go up and down completely randomly.
Pair Corralation between Vestas Wind and ATT
Assuming the 90 days horizon Vestas Wind Systems is expected to under-perform the ATT. In addition to that, Vestas Wind is 2.02 times more volatile than ATT Inc. It trades about -0.25 of its total potential returns per unit of risk. ATT Inc is currently generating about -0.26 per unit of volatility. If you would invest 1,702 in ATT Inc on January 17, 2024 and sell it today you would lose (78.00) from holding ATT Inc or give up 4.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vestas Wind Systems vs. ATT Inc
Performance |
| Timeline |
| Vestas Wind Systems |
| ATT Inc |
Vestas Wind and ATT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vestas Wind and ATT
The main advantage of trading using opposite Vestas Wind and ATT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vestas Wind 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.| Vestas Wind vs. GE Aerospace | Vestas Wind vs. Eaton PLC | Vestas Wind vs. Illinois Tool Works | Vestas Wind vs. Parker Hannifin |
| ATT vs. Aquagold International | ATT vs. Thrivent High Yield | ATT vs. Morningstar Unconstrained Allocation | ATT vs. Via Renewables |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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