Correlation Between Aquestive Therapeutics and Allegheny Technologies
Can any of the company-specific risk be diversified away by investing in both Aquestive Therapeutics and Allegheny Technologies 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 Aquestive Therapeutics and Allegheny Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aquestive Therapeutics and Allegheny Technologies Incorporated, you can compare the effects of market volatilities on Aquestive Therapeutics and Allegheny Technologies 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 Aquestive Therapeutics with a short position of Allegheny Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aquestive Therapeutics and Allegheny Technologies.
Diversification Opportunities for Aquestive Therapeutics and Allegheny Technologies
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Aquestive and Allegheny is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Aquestive Therapeutics and Allegheny Technologies Incorpo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allegheny Technologies and Aquestive Therapeutics 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 Aquestive Therapeutics are associated (or correlated) with Allegheny Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allegheny Technologies has no effect on the direction of Aquestive Therapeutics i.e., Aquestive Therapeutics and Allegheny Technologies go up and down completely randomly.
Pair Corralation between Aquestive Therapeutics and Allegheny Technologies
Given the investment horizon of 90 days Aquestive Therapeutics is expected to generate 2.19 times more return on investment than Allegheny Technologies. However, Aquestive Therapeutics is 2.19 times more volatile than Allegheny Technologies Incorporated. It trades about 0.07 of its potential returns per unit of risk. Allegheny Technologies Incorporated is currently generating about 0.06 per unit of risk. If you would invest 215.00 in Aquestive Therapeutics on August 31, 2024 and sell it today you would earn a total of 294.00 from holding Aquestive Therapeutics or generate 136.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aquestive Therapeutics vs. Allegheny Technologies Incorpo
Performance |
| Timeline |
| Aquestive Therapeutics |
| Allegheny Technologies |
Aquestive Therapeutics and Allegheny Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aquestive Therapeutics and Allegheny Technologies
The main advantage of trading using opposite Aquestive Therapeutics and Allegheny Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aquestive Therapeutics position performs unexpectedly, Allegheny Technologies 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 Allegheny Technologies will offset losses from the drop in Allegheny Technologies' long position.The idea behind Aquestive Therapeutics and Allegheny Technologies Incorporated 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.| Allegheny Technologies vs. Worthington Industries | Allegheny Technologies vs. ESAB Corp | Allegheny Technologies vs. Insteel Industries | Allegheny Technologies vs. Northwest Pipe |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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