Correlation Between Allegheny Technologies and Summit Materials
Can any of the company-specific risk be diversified away by investing in both Allegheny Technologies and Summit Materials 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 Summit Materials 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 Summit Materials, you can compare the effects of market volatilities on Allegheny Technologies and Summit Materials 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 Summit Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allegheny Technologies and Summit Materials.
Diversification Opportunities for Allegheny Technologies and Summit Materials
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Allegheny and Summit is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Allegheny Technologies Incorpo and Summit Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Materials 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 Summit Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Materials has no effect on the direction of Allegheny Technologies i.e., Allegheny Technologies and Summit Materials go up and down completely randomly.
Pair Corralation between Allegheny Technologies and Summit Materials
Considering the 90-day investment horizon Allegheny Technologies Incorporated is expected to generate 25.81 times more return on investment than Summit Materials. However, Allegheny Technologies is 25.81 times more volatile than Summit Materials. It trades about 0.06 of its potential returns per unit of risk. Summit Materials is currently generating about 0.25 per unit of risk. If you would invest 5,629 in Allegheny Technologies Incorporated on November 27, 2024 and sell it today you would earn a total of 174.00 from holding Allegheny Technologies Incorporated or generate 3.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 60.0% |
| Values | Daily Returns |
Allegheny Technologies Incorpo vs. Summit Materials
Performance |
| Timeline |
| Allegheny Technologies |
| Summit Materials |
Risk-Adjusted Performance
Good
Weak | Strong |
Allegheny Technologies and Summit Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allegheny Technologies and Summit Materials
The main advantage of trading using opposite Allegheny Technologies and Summit Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allegheny Technologies position performs unexpectedly, Summit Materials 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 Summit Materials will offset losses from the drop in Summit Materials' long position.| Allegheny Technologies vs. Worthington Industries | Allegheny Technologies vs. ESAB Corp | Allegheny Technologies vs. Insteel Industries | Allegheny Technologies vs. Northwest Pipe |
| Summit Materials vs. Martin Marietta Materials | Summit Materials vs. Vulcan Materials | Summit Materials vs. United States Lime | Summit Materials vs. James Hardie Industries |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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