Correlation Between Allegheny Technologies and Mueller Industries
Can any of the company-specific risk be diversified away by investing in both Allegheny Technologies and Mueller 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 Mueller 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 Mueller Industries, you can compare the effects of market volatilities on Allegheny Technologies and Mueller 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 Mueller Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allegheny Technologies and Mueller Industries.
Diversification Opportunities for Allegheny Technologies and Mueller Industries
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Allegheny and Mueller is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Allegheny Technologies Incorpo and Mueller Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mueller 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 Mueller Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mueller Industries has no effect on the direction of Allegheny Technologies i.e., Allegheny Technologies and Mueller Industries go up and down completely randomly.
Pair Corralation between Allegheny Technologies and Mueller Industries
Assuming the 90 days horizon Allegheny Technologies is expected to generate 1.64 times less return on investment than Mueller Industries. But when comparing it to its historical volatility, Allegheny Technologies Incorporated is 1.11 times less risky than Mueller Industries. It trades about 0.06 of its potential returns per unit of risk. Mueller Industries is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,738 in Mueller Industries on September 26, 2024 and sell it today you would earn a total of 4,812 from holding Mueller Industries or generate 175.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Allegheny Technologies Incorpo vs. Mueller Industries
Performance |
| Timeline |
| Allegheny Technologies |
| Mueller Industries |
Allegheny Technologies and Mueller Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allegheny Technologies and Mueller Industries
The main advantage of trading using opposite Allegheny Technologies and Mueller Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allegheny Technologies position performs unexpectedly, Mueller 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 Mueller Industries will offset losses from the drop in Mueller Industries' long position.| Allegheny Technologies vs. China International Marine | Allegheny Technologies vs. thyssenkrupp AG | Allegheny Technologies vs. thyssenkrupp AG | Allegheny Technologies vs. Mueller Industries |
| Mueller Industries vs. Allegheny Technologies Incorporated | Mueller Industries vs. China International Marine | Mueller Industries vs. thyssenkrupp AG | Mueller Industries vs. thyssenkrupp AG |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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