Correlation Between Atkore International and AFC Energy
Can any of the company-specific risk be diversified away by investing in both Atkore International and AFC Energy 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 Atkore International and AFC Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Atkore International Group and AFC Energy plc, you can compare the effects of market volatilities on Atkore International and AFC Energy 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 Atkore International with a short position of AFC Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atkore International and AFC Energy.
Diversification Opportunities for Atkore International and AFC Energy
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Atkore and AFC is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Atkore International Group and AFC Energy plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AFC Energy plc and Atkore International 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 Atkore International Group are associated (or correlated) with AFC Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AFC Energy plc has no effect on the direction of Atkore International i.e., Atkore International and AFC Energy go up and down completely randomly.
Pair Corralation between Atkore International and AFC Energy
Given the investment horizon of 90 days Atkore International is expected to generate 2.4 times less return on investment than AFC Energy. But when comparing it to its historical volatility, Atkore International Group is 1.74 times less risky than AFC Energy. It trades about 0.1 of its potential returns per unit of risk. AFC Energy plc is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 11.00 in AFC Energy plc on August 29, 2024 and sell it today you would earn a total of 2.00 from holding AFC Energy plc or generate 18.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Atkore International Group vs. AFC Energy plc
Performance |
| Timeline |
| Atkore International |
| AFC Energy plc |
Atkore International and AFC Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Atkore International and AFC Energy
The main advantage of trading using opposite Atkore International and AFC Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atkore International position performs unexpectedly, AFC Energy 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 AFC Energy will offset losses from the drop in AFC Energy's long position.| Atkore International vs. Hubbell | Atkore International vs. Enersys | Atkore International vs. Advanced Energy Industries | Atkore International vs. nVent Electric PLC |
| AFC Energy vs. Legrand SA ADR | AFC Energy vs. Loop Energy | AFC Energy vs. Sunrise New Energy | AFC Energy vs. Alfen NV |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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