Correlation Between Century Aluminum and Allegheny Technologies
Can any of the company-specific risk be diversified away by investing in both Century Aluminum and Allegheny Technologies 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 Century Aluminum and Allegheny Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Century Aluminum and Allegheny Technologies Incorporated, you can compare the effects of market volatilities on Century Aluminum and Allegheny Technologies 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 Century Aluminum with a short position of Allegheny Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Century Aluminum and Allegheny Technologies.
Diversification Opportunities for Century Aluminum and Allegheny Technologies
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Century and Allegheny is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Century Aluminum and Allegheny Technologies Incorpo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allegheny Technologies and Century Aluminum 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 Century Aluminum are associated (or correlated) with Allegheny Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allegheny Technologies has no effect on the direction of Century Aluminum i.e., Century Aluminum and Allegheny Technologies go up and down completely randomly.
Pair Corralation between Century Aluminum and Allegheny Technologies
Given the investment horizon of 90 days Century Aluminum is expected to generate 2.03 times more return on investment than Allegheny Technologies. However, Century Aluminum is 2.03 times more volatile than Allegheny Technologies Incorporated. It trades about 0.25 of its potential returns per unit of risk. Allegheny Technologies Incorporated is currently generating about 0.11 per unit of risk. If you would invest 1,781 in Century Aluminum on August 30, 2024 and sell it today you would earn a total of 523.00 from holding Century Aluminum or generate 29.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Century Aluminum vs. Allegheny Technologies Incorpo
Performance |
| Timeline |
| Century Aluminum |
| Allegheny Technologies |
Century Aluminum and Allegheny Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Century Aluminum and Allegheny Technologies
The main advantage of trading using opposite Century Aluminum and Allegheny Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Century Aluminum position performs unexpectedly, Allegheny Technologies 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 Allegheny Technologies will offset losses from the drop in Allegheny Technologies' long position.| Century Aluminum vs. Kaiser Aluminum | Century Aluminum vs. Commercial Metals | Century Aluminum vs. Steel Dynamics | Century Aluminum vs. Reliance Steel Aluminum |
| Allegheny Technologies vs. Worthington Industries | Allegheny Technologies vs. Haynes International | Allegheny Technologies vs. ESAB Corp | Allegheny Technologies vs. Insteel 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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