Correlation Between Anderson Industrial and Allis Electric
Can any of the company-specific risk be diversified away by investing in both Anderson Industrial and Allis Electric 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 Anderson Industrial and Allis Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Anderson Industrial Corp and Allis Electric Co, you can compare the effects of market volatilities on Anderson Industrial and Allis Electric 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 Anderson Industrial with a short position of Allis Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anderson Industrial and Allis Electric.
Diversification Opportunities for Anderson Industrial and Allis Electric
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Anderson and Allis is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Anderson Industrial Corp and Allis Electric Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allis Electric and Anderson Industrial 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 Anderson Industrial Corp are associated (or correlated) with Allis Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allis Electric has no effect on the direction of Anderson Industrial i.e., Anderson Industrial and Allis Electric go up and down completely randomly.
Pair Corralation between Anderson Industrial and Allis Electric
Assuming the 90 days trading horizon Anderson Industrial Corp is expected to under-perform the Allis Electric. In addition to that, Anderson Industrial is 1.1 times more volatile than Allis Electric Co. It trades about -0.25 of its total potential returns per unit of risk. Allis Electric Co is currently generating about -0.02 per unit of volatility. If you would invest 11,200 in Allis Electric Co on September 4, 2024 and sell it today you would lose (200.00) from holding Allis Electric Co or give up 1.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Anderson Industrial Corp vs. Allis Electric Co
Performance |
| Timeline |
| Anderson Industrial Corp |
| Allis Electric |
Anderson Industrial and Allis Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Anderson Industrial and Allis Electric
The main advantage of trading using opposite Anderson Industrial and Allis Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Anderson Industrial position performs unexpectedly, Allis Electric 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 Allis Electric will offset losses from the drop in Allis Electric's long position.| Anderson Industrial vs. Universal Microelectronics Co | Anderson Industrial vs. AVerMedia Technologies | Anderson Industrial vs. Symtek Automation Asia | Anderson Industrial vs. WiseChip Semiconductor |
| Allis Electric vs. Universal Microelectronics Co | Allis Electric vs. AVerMedia Technologies | Allis Electric vs. Symtek Automation Asia | Allis Electric vs. WiseChip Semiconductor |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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