Correlation Between Allegheny Technologies and BCE
Can any of the company-specific risk be diversified away by investing in both Allegheny Technologies and BCE 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 BCE 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 BCE Inc, you can compare the effects of market volatilities on Allegheny Technologies and BCE 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 BCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allegheny Technologies and BCE.
Diversification Opportunities for Allegheny Technologies and BCE
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Allegheny and BCE is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Allegheny Technologies Incorpo and BCE Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BCE Inc 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 BCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BCE Inc has no effect on the direction of Allegheny Technologies i.e., Allegheny Technologies and BCE go up and down completely randomly.
Pair Corralation between Allegheny Technologies and BCE
Considering the 90-day investment horizon Allegheny Technologies Incorporated is expected to generate 2.03 times more return on investment than BCE. However, Allegheny Technologies is 2.03 times more volatile than BCE Inc. It trades about 0.08 of its potential returns per unit of risk. BCE Inc is currently generating about -0.11 per unit of risk. If you would invest 3,975 in Allegheny Technologies Incorporated on September 3, 2024 and sell it today you would earn a total of 2,042 from holding Allegheny Technologies Incorporated or generate 51.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Allegheny Technologies Incorpo vs. BCE Inc
Performance |
| Timeline |
| Allegheny Technologies |
| BCE Inc |
Allegheny Technologies and BCE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allegheny Technologies and BCE
The main advantage of trading using opposite Allegheny Technologies and BCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allegheny Technologies position performs unexpectedly, BCE 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 BCE will offset losses from the drop in BCE's long position.| 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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