Correlation Between Allegheny Technologies and Cadence Design
Can any of the company-specific risk be diversified away by investing in both Allegheny Technologies and Cadence Design 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 Cadence Design 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 Cadence Design Systems, you can compare the effects of market volatilities on Allegheny Technologies and Cadence Design 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 Cadence Design. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allegheny Technologies and Cadence Design.
Diversification Opportunities for Allegheny Technologies and Cadence Design
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Allegheny and Cadence is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Allegheny Technologies Incorpo and Cadence Design Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cadence Design Systems 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 Cadence Design. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cadence Design Systems has no effect on the direction of Allegheny Technologies i.e., Allegheny Technologies and Cadence Design go up and down completely randomly.
Pair Corralation between Allegheny Technologies and Cadence Design
Considering the 90-day investment horizon Allegheny Technologies Incorporated is expected to generate 1.09 times more return on investment than Cadence Design. However, Allegheny Technologies is 1.09 times more volatile than Cadence Design Systems. It trades about 0.06 of its potential returns per unit of risk. Cadence Design Systems is currently generating about 0.03 per unit of risk. If you would invest 4,267 in Allegheny Technologies Incorporated on September 12, 2024 and sell it today you would earn a total of 1,442 from holding Allegheny Technologies Incorporated or generate 33.79% 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. Cadence Design Systems
Performance |
| Timeline |
| Allegheny Technologies |
| Cadence Design Systems |
Allegheny Technologies and Cadence Design Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allegheny Technologies and Cadence Design
The main advantage of trading using opposite Allegheny Technologies and Cadence Design positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allegheny Technologies position performs unexpectedly, Cadence Design 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 Cadence Design will offset losses from the drop in Cadence Design's long position.| Allegheny Technologies vs. Worthington Industries | Allegheny Technologies vs. ESAB Corp | Allegheny Technologies vs. Insteel Industries | Allegheny Technologies vs. Northwest Pipe |
| Cadence Design vs. Workday | Cadence Design vs. Salesforce | Cadence Design vs. Intuit Inc | Cadence Design vs. Snowflake |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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