Correlation Between Allegheny Technologies and Carpenter Technology
Can any of the company-specific risk be diversified away by investing in both Allegheny Technologies and Carpenter Technology 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 Carpenter Technology 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 Carpenter Technology, you can compare the effects of market volatilities on Allegheny Technologies and Carpenter Technology 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 Carpenter Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allegheny Technologies and Carpenter Technology.
Diversification Opportunities for Allegheny Technologies and Carpenter Technology
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Allegheny and Carpenter is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Allegheny Technologies Incorpo and Carpenter Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carpenter Technology 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 Carpenter Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carpenter Technology has no effect on the direction of Allegheny Technologies i.e., Allegheny Technologies and Carpenter Technology go up and down completely randomly.
Pair Corralation between Allegheny Technologies and Carpenter Technology
Assuming the 90 days horizon Allegheny Technologies Incorporated is expected to under-perform the Carpenter Technology. But the stock apears to be less risky and, when comparing its historical volatility, Allegheny Technologies Incorporated is 1.32 times less risky than Carpenter Technology. The stock trades about -0.05 of its potential returns per unit of risk. The Carpenter Technology is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 14,780 in Carpenter Technology on October 14, 2024 and sell it today you would earn a total of 2,920 from holding Carpenter Technology or generate 19.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Allegheny Technologies Incorpo vs. Carpenter Technology
Performance |
| Timeline |
| Allegheny Technologies |
| Carpenter Technology |
Allegheny Technologies and Carpenter Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allegheny Technologies and Carpenter Technology
The main advantage of trading using opposite Allegheny Technologies and Carpenter Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allegheny Technologies position performs unexpectedly, Carpenter Technology 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 Carpenter Technology will offset losses from the drop in Carpenter Technology's long position.| Allegheny Technologies vs. Superior Plus Corp | Allegheny Technologies vs. NMI Holdings | Allegheny Technologies vs. SIVERS SEMICONDUCTORS AB | Allegheny Technologies vs. Talanx AG |
| Carpenter Technology vs. Clean Energy Fuels | Carpenter Technology vs. EAGLE MATERIALS | Carpenter Technology vs. CLEAN ENERGY FUELS | Carpenter Technology vs. Carnegie Clean Energy |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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