Correlation Between Allegheny Technologies and ARCA Japan
Can any of the company-specific risk be diversified away by investing in both Allegheny Technologies and ARCA Japan 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 ARCA Japan 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 ARCA Japan, you can compare the effects of market volatilities on Allegheny Technologies and ARCA Japan 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 ARCA Japan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allegheny Technologies and ARCA Japan.
Diversification Opportunities for Allegheny Technologies and ARCA Japan
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Allegheny and ARCA is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Allegheny Technologies Incorpo and ARCA Japan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARCA Japan 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 ARCA Japan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARCA Japan has no effect on the direction of Allegheny Technologies i.e., Allegheny Technologies and ARCA Japan go up and down completely randomly.
Pair Corralation between Allegheny Technologies and ARCA Japan
Considering the 90-day investment horizon Allegheny Technologies Incorporated is expected to generate 2.65 times more return on investment than ARCA Japan. However, Allegheny Technologies is 2.65 times more volatile than ARCA Japan. It trades about 0.25 of its potential returns per unit of risk. ARCA Japan is currently generating about 0.07 per unit of risk. If you would invest 5,351 in Allegheny Technologies Incorporated on September 5, 2024 and sell it today you would earn a total of 623.00 from holding Allegheny Technologies Incorporated or generate 11.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 68.18% |
| Values | Daily Returns |
Allegheny Technologies Incorpo vs. ARCA Japan
Performance |
| Timeline |
Allegheny Technologies and ARCA Japan Volatility Contrast
Predicted Return Density |
| Returns |
Allegheny Technologies Incorporated
Pair trading matchups for Allegheny Technologies
ARCA Japan
Pair trading matchups for ARCA Japan
Pair Trading with Allegheny Technologies and ARCA Japan
The main advantage of trading using opposite Allegheny Technologies and ARCA Japan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allegheny Technologies position performs unexpectedly, ARCA Japan 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 ARCA Japan will offset losses from the drop in ARCA Japan's long position.| Allegheny Technologies vs. Northwest Pipe | Allegheny Technologies vs. Insteel Industries | Allegheny Technologies vs. ESAB Corp | Allegheny Technologies vs. Gulf Island Fabrication |
| ARCA Japan vs. Allegheny Technologies Incorporated | ARCA Japan vs. Titan International | ARCA Japan vs. Siriuspoint | ARCA Japan vs. LithiumBank Resources Corp |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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