Correlation Between Allegheny Technologies and Tesla
Can any of the company-specific risk be diversified away by investing in both Allegheny Technologies and Tesla 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 Tesla 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 Tesla Inc, you can compare the effects of market volatilities on Allegheny Technologies and Tesla 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 Tesla. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allegheny Technologies and Tesla.
Diversification Opportunities for Allegheny Technologies and Tesla
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Allegheny and Tesla is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Allegheny Technologies Incorpo and Tesla Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tesla 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 Tesla. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tesla Inc has no effect on the direction of Allegheny Technologies i.e., Allegheny Technologies and Tesla go up and down completely randomly.
Pair Corralation between Allegheny Technologies and Tesla
Considering the 90-day investment horizon Allegheny Technologies is expected to generate 1.28 times less return on investment than Tesla. But when comparing it to its historical volatility, Allegheny Technologies Incorporated is 1.61 times less risky than Tesla. It trades about 0.07 of its potential returns per unit of risk. Tesla Inc is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 16,782 in Tesla Inc on September 1, 2024 and sell it today you would earn a total of 17,734 from holding Tesla Inc or generate 105.67% 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. Tesla Inc
Performance |
| Timeline |
| Allegheny Technologies |
| Tesla Inc |
Allegheny Technologies and Tesla Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allegheny Technologies and Tesla
The main advantage of trading using opposite Allegheny Technologies and Tesla positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allegheny Technologies position performs unexpectedly, Tesla 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 Tesla will offset losses from the drop in Tesla's long position.| Allegheny Technologies vs. ESAB Corp | Allegheny Technologies vs. Insteel Industries | Allegheny Technologies vs. Northwest Pipe | Allegheny Technologies vs. Carpenter Technology |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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