Correlation Between Allegheny Technologies and ArcelorMittal
Can any of the company-specific risk be diversified away by investing in both Allegheny Technologies and ArcelorMittal 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 ArcelorMittal 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 ArcelorMittal SA ADR, you can compare the effects of market volatilities on Allegheny Technologies and ArcelorMittal 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 ArcelorMittal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allegheny Technologies and ArcelorMittal.
Diversification Opportunities for Allegheny Technologies and ArcelorMittal
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Allegheny and ArcelorMittal is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Allegheny Technologies Incorpo and ArcelorMittal SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ArcelorMittal SA ADR 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 ArcelorMittal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ArcelorMittal SA ADR has no effect on the direction of Allegheny Technologies i.e., Allegheny Technologies and ArcelorMittal go up and down completely randomly.
Pair Corralation between Allegheny Technologies and ArcelorMittal
Considering the 90-day investment horizon Allegheny Technologies Incorporated is expected to under-perform the ArcelorMittal. In addition to that, Allegheny Technologies is 1.64 times more volatile than ArcelorMittal SA ADR. It trades about -0.06 of its total potential returns per unit of risk. ArcelorMittal SA ADR is currently generating about 0.17 per unit of volatility. If you would invest 2,328 in ArcelorMittal SA ADR on August 24, 2024 and sell it today you would earn a total of 183.00 from holding ArcelorMittal SA ADR or generate 7.86% 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. ArcelorMittal SA ADR
Performance |
| Timeline |
| Allegheny Technologies |
| ArcelorMittal SA ADR |
Allegheny Technologies and ArcelorMittal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allegheny Technologies and ArcelorMittal
The main advantage of trading using opposite Allegheny Technologies and ArcelorMittal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allegheny Technologies position performs unexpectedly, ArcelorMittal 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 ArcelorMittal will offset losses from the drop in ArcelorMittal's long position.| Allegheny Technologies vs. Worthington Industries | Allegheny Technologies vs. Haynes International | Allegheny Technologies vs. ESAB Corp | Allegheny Technologies vs. Insteel Industries |
| ArcelorMittal vs. Cleveland Cliffs | ArcelorMittal vs. United States Steel | ArcelorMittal vs. Reliance Steel Aluminum | ArcelorMittal vs. Nucor 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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