Correlation Between Allegheny Technologies and Insteel Industries
Can any of the company-specific risk be diversified away by investing in both Allegheny Technologies and Insteel Industries 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 Allegheny Technologies and Insteel Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Allegheny Technologies Incorporated and Insteel Industries, you can compare the effects of market volatilities on Allegheny Technologies and Insteel Industries 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 Allegheny Technologies with a short position of Insteel Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allegheny Technologies and Insteel Industries.
Diversification Opportunities for Allegheny Technologies and Insteel Industries
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Allegheny and Insteel is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Allegheny Technologies Incorpo and Insteel Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insteel Industries and Allegheny Technologies 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 Allegheny Technologies Incorporated are associated (or correlated) with Insteel Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insteel Industries has no effect on the direction of Allegheny Technologies i.e., Allegheny Technologies and Insteel Industries go up and down completely randomly.
Pair Corralation between Allegheny Technologies and Insteel Industries
Assuming the 90 days horizon Allegheny Technologies Incorporated is expected to generate 0.8 times more return on investment than Insteel Industries. However, Allegheny Technologies Incorporated is 1.25 times less risky than Insteel Industries. It trades about -0.34 of its potential returns per unit of risk. Insteel Industries is currently generating about -0.31 per unit of risk. If you would invest 5,636 in Allegheny Technologies Incorporated on September 25, 2024 and sell it today you would lose (444.00) from holding Allegheny Technologies Incorporated or give up 7.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Allegheny Technologies Incorpo vs. Insteel Industries
Performance |
| Timeline |
| Allegheny Technologies |
| Insteel Industries |
Allegheny Technologies and Insteel Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allegheny Technologies and Insteel Industries
The main advantage of trading using opposite Allegheny Technologies and Insteel Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allegheny Technologies position performs unexpectedly, Insteel Industries 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 Insteel Industries will offset losses from the drop in Insteel Industries' long position.| Allegheny Technologies vs. China International Marine | Allegheny Technologies vs. thyssenkrupp AG | Allegheny Technologies vs. thyssenkrupp AG | Allegheny Technologies vs. Mueller Industries |
| Insteel Industries vs. MACOM Technology Solutions | Insteel Industries vs. SCOTT TECHNOLOGY | Insteel Industries vs. ScanSource | Insteel Industries vs. BOSTON BEER A |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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