Correlation Between Black Hills and Allient
Can any of the company-specific risk be diversified away by investing in both Black Hills and Allient 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 Black Hills and Allient into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Black Hills and Allient, you can compare the effects of market volatilities on Black Hills and Allient 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 Black Hills with a short position of Allient. Check out your portfolio center. Please also check ongoing floating volatility patterns of Black Hills and Allient.
Diversification Opportunities for Black Hills and Allient
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Black and Allient is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Black Hills and Allient in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allient and Black Hills 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 Black Hills are associated (or correlated) with Allient. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allient has no effect on the direction of Black Hills i.e., Black Hills and Allient go up and down completely randomly.
Pair Corralation between Black Hills and Allient
Considering the 90-day investment horizon Black Hills is expected to under-perform the Allient. But the stock apears to be less risky and, when comparing its historical volatility, Black Hills is 1.7 times less risky than Allient. The stock trades about -0.02 of its potential returns per unit of risk. The Allient is currently generating about 0.41 of returns per unit of risk over similar time horizon. If you would invest 2,336 in Allient on September 12, 2024 and sell it today you would earn a total of 399.00 from holding Allient or generate 17.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Black Hills vs. Allient
Performance |
| Timeline |
| Black Hills |
| Allient |
Black Hills and Allient Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Black Hills and Allient
The main advantage of trading using opposite Black Hills and Allient positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Black Hills position performs unexpectedly, Allient 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 Allient will offset losses from the drop in Allient's long position.| Black Hills vs. Avista | Black Hills vs. Otter Tail | Black Hills vs. Companhia Paranaense de | Black Hills vs. Allete Inc |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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