Correlation Between ATT and New World
Can any of the company-specific risk be diversified away by investing in both ATT and New World 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 New World into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ATT Inc and New World Development, you can compare the effects of market volatilities on ATT and New World 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 New World. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATT and New World.
Diversification Opportunities for ATT and New World
Excellent diversification
The 3 months correlation between ATT and New is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and New World Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New World Development 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 New World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New World Development has no effect on the direction of ATT i.e., ATT and New World go up and down completely randomly.
Pair Corralation between ATT and New World
Taking into account the 90-day investment horizon ATT Inc is expected to under-perform the New World. But the stock apears to be less risky and, when comparing its historical volatility, ATT Inc is 1.29 times less risky than New World. The stock trades about -0.17 of its potential returns per unit of risk. The New World Development is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 85.00 in New World Development on September 5, 2025 and sell it today you would earn a total of 9.00 from holding New World Development or generate 10.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.44% |
| Values | Daily Returns |
ATT Inc vs. New World Development
Performance |
| Timeline |
| ATT Inc |
| New World Development |
ATT and New World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ATT and New World
The main advantage of trading using opposite ATT and New World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATT position performs unexpectedly, New World 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 New World will offset losses from the drop in New World's long position.The idea behind ATT Inc and New World Development 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.| New World vs. Aldel Financial II | New World vs. Copperbank Resources Corp | New World vs. Malaga Financial | New World vs. Exchange Bankshares |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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