Correlation Between Summit Materials and Allegheny Technologies
Can any of the company-specific risk be diversified away by investing in both Summit Materials 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 Summit Materials and Allegheny Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Materials and Allegheny Technologies Incorporated, you can compare the effects of market volatilities on Summit Materials 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 Summit Materials with a short position of Allegheny Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and Allegheny Technologies.
Diversification Opportunities for Summit Materials and Allegheny Technologies
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Summit and Allegheny is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials and Allegheny Technologies Incorpo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allegheny Technologies and Summit Materials 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 Summit Materials 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 Summit Materials i.e., Summit Materials and Allegheny Technologies go up and down completely randomly.
Pair Corralation between Summit Materials and Allegheny Technologies
Considering the 90-day investment horizon Summit Materials is expected to generate 6.34 times less return on investment than Allegheny Technologies. But when comparing it to its historical volatility, Summit Materials is 25.81 times less risky than Allegheny Technologies. It trades about 0.25 of its potential returns per unit of risk. Allegheny Technologies Incorporated is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 5,629 in Allegheny Technologies Incorporated on November 27, 2024 and sell it today you would earn a total of 174.00 from holding Allegheny Technologies Incorporated or generate 3.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 60.0% |
| Values | Daily Returns |
Summit Materials vs. Allegheny Technologies Incorpo
Performance |
| Timeline |
| Summit Materials |
Risk-Adjusted Performance
Good
Weak | Strong |
| Allegheny Technologies |
Summit Materials and Allegheny Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Materials and Allegheny Technologies
The main advantage of trading using opposite Summit Materials and Allegheny Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials 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.| Summit Materials vs. Martin Marietta Materials | Summit Materials vs. Vulcan Materials | Summit Materials vs. United States Lime | Summit Materials vs. James Hardie Industries |
| Allegheny Technologies vs. Worthington Industries | Allegheny Technologies vs. ESAB Corp | Allegheny Technologies vs. Insteel Industries | Allegheny Technologies vs. Northwest Pipe |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital |