Correlation Between E3 LITHIUM and Allegheny Technologies
Can any of the company-specific risk be diversified away by investing in both E3 LITHIUM 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 E3 LITHIUM and Allegheny Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between E3 LITHIUM LTD and Allegheny Technologies Incorporated, you can compare the effects of market volatilities on E3 LITHIUM 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 E3 LITHIUM with a short position of Allegheny Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of E3 LITHIUM and Allegheny Technologies.
Diversification Opportunities for E3 LITHIUM and Allegheny Technologies
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between OW3 and Allegheny is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding E3 LITHIUM LTD and Allegheny Technologies Incorpo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allegheny Technologies and E3 LITHIUM 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 E3 LITHIUM LTD 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 E3 LITHIUM i.e., E3 LITHIUM and Allegheny Technologies go up and down completely randomly.
Pair Corralation between E3 LITHIUM and Allegheny Technologies
Assuming the 90 days horizon E3 LITHIUM LTD is expected to generate 3.18 times more return on investment than Allegheny Technologies. However, E3 LITHIUM is 3.18 times more volatile than Allegheny Technologies Incorporated. It trades about 0.13 of its potential returns per unit of risk. Allegheny Technologies Incorporated is currently generating about 0.21 per unit of risk. If you would invest 58.00 in E3 LITHIUM LTD on October 28, 2024 and sell it today you would earn a total of 5.00 from holding E3 LITHIUM LTD or generate 8.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
E3 LITHIUM LTD vs. Allegheny Technologies Incorpo
Performance |
| Timeline |
| E3 LITHIUM LTD |
| Allegheny Technologies |
E3 LITHIUM and Allegheny Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with E3 LITHIUM and Allegheny Technologies
The main advantage of trading using opposite E3 LITHIUM and Allegheny Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if E3 LITHIUM 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.| E3 LITHIUM vs. COMBA TELECOM SYST | E3 LITHIUM vs. KIMBALL ELECTRONICS | E3 LITHIUM vs. STMICROELECTRONICS | E3 LITHIUM vs. Samsung Electronics Co |
| Allegheny Technologies vs. USWE SPORTS AB | Allegheny Technologies vs. Dalata Hotel Group | Allegheny Technologies vs. HYATT HOTELS A | Allegheny Technologies vs. InterContinental Hotels Group |
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 Stocks Directory module to find actively traded stocks across global markets.
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