Correlation Between Mueller Industries and Allegheny Technologies
Can any of the company-specific risk be diversified away by investing in both Mueller Industries 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 Mueller Industries and Allegheny Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mueller Industries and Allegheny Technologies Incorporated, you can compare the effects of market volatilities on Mueller Industries 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 Mueller Industries with a short position of Allegheny Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mueller Industries and Allegheny Technologies.
Diversification Opportunities for Mueller Industries and Allegheny Technologies
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Mueller and Allegheny is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Mueller Industries and Allegheny Technologies Incorpo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allegheny Technologies and Mueller Industries 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 Mueller Industries 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 Mueller Industries i.e., Mueller Industries and Allegheny Technologies go up and down completely randomly.
Pair Corralation between Mueller Industries and Allegheny Technologies
Assuming the 90 days horizon Mueller Industries is expected to under-perform the Allegheny Technologies. In addition to that, Mueller Industries is 1.77 times more volatile than Allegheny Technologies Incorporated. It trades about -0.26 of its total potential returns per unit of risk. Allegheny Technologies Incorporated is currently generating about -0.06 per unit of volatility. If you would invest 5,382 in Allegheny Technologies Incorporated on October 13, 2024 and sell it today you would lose (60.00) from holding Allegheny Technologies Incorporated or give up 1.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mueller Industries vs. Allegheny Technologies Incorpo
Performance |
| Timeline |
| Mueller Industries |
| Allegheny Technologies |
Mueller Industries and Allegheny Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mueller Industries and Allegheny Technologies
The main advantage of trading using opposite Mueller Industries and Allegheny Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mueller Industries 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.| Mueller Industries vs. Sinopec Shanghai Petrochemical | Mueller Industries vs. Merit Medical Systems | Mueller Industries vs. X FAB Silicon Foundries | Mueller Industries vs. SEKISUI CHEMICAL |
| Allegheny Technologies vs. Superior Plus Corp | Allegheny Technologies vs. NMI Holdings | Allegheny Technologies vs. SIVERS SEMICONDUCTORS AB | Allegheny Technologies vs. Talanx AG |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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