Correlation Between Allegheny Technologies and Minerals Technologies
Can any of the company-specific risk be diversified away by investing in both Allegheny Technologies and Minerals 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 Allegheny Technologies and Minerals Technologies 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 Minerals Technologies, you can compare the effects of market volatilities on Allegheny Technologies and Minerals 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 Allegheny Technologies with a short position of Minerals Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allegheny Technologies and Minerals Technologies.
Diversification Opportunities for Allegheny Technologies and Minerals Technologies
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Allegheny and Minerals is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Allegheny Technologies Incorpo and Minerals Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Minerals Technologies 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 Minerals Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Minerals Technologies has no effect on the direction of Allegheny Technologies i.e., Allegheny Technologies and Minerals Technologies go up and down completely randomly.
Pair Corralation between Allegheny Technologies and Minerals Technologies
Assuming the 90 days trading horizon Allegheny Technologies Incorporated is expected to generate 1.16 times more return on investment than Minerals Technologies. However, Allegheny Technologies is 1.16 times more volatile than Minerals Technologies. It trades about 0.17 of its potential returns per unit of risk. Minerals Technologies is currently generating about -0.07 per unit of risk. If you would invest 5,290 in Allegheny Technologies Incorporated on October 28, 2024 and sell it today you would earn a total of 264.00 from holding Allegheny Technologies Incorporated or generate 4.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Allegheny Technologies Incorpo vs. Minerals Technologies
Performance |
| Timeline |
| Allegheny Technologies |
| Minerals Technologies |
Allegheny Technologies and Minerals Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allegheny Technologies and Minerals Technologies
The main advantage of trading using opposite Allegheny Technologies and Minerals Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allegheny Technologies position performs unexpectedly, Minerals 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 Minerals Technologies will offset losses from the drop in Minerals Technologies' long position.The idea behind Allegheny Technologies Incorporated and Minerals Technologies 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.
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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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