Correlation Between Tesla and Allegheny Technologies
Can any of the company-specific risk be diversified away by investing in both Tesla 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 Tesla and Allegheny Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tesla Inc and Allegheny Technologies Incorporated, you can compare the effects of market volatilities on Tesla 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 Tesla with a short position of Allegheny Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tesla and Allegheny Technologies.
Diversification Opportunities for Tesla and Allegheny Technologies
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Tesla and Allegheny is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Tesla Inc and Allegheny Technologies Incorpo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allegheny Technologies and Tesla 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 Tesla Inc 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 Tesla i.e., Tesla and Allegheny Technologies go up and down completely randomly.
Pair Corralation between Tesla and Allegheny Technologies
Given the investment horizon of 90 days Tesla Inc is expected to generate 1.8 times more return on investment than Allegheny Technologies. However, Tesla is 1.8 times more volatile than Allegheny Technologies Incorporated. It trades about 0.15 of its potential returns per unit of risk. Allegheny Technologies Incorporated is currently generating about 0.01 per unit of risk. If you would invest 17,500 in Tesla Inc on September 3, 2024 and sell it today you would earn a total of 17,016 from holding Tesla Inc or generate 97.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tesla Inc vs. Allegheny Technologies Incorpo
Performance |
| Timeline |
| Tesla Inc |
| Allegheny Technologies |
Tesla and Allegheny Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tesla and Allegheny Technologies
The main advantage of trading using opposite Tesla and Allegheny Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tesla 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.The idea behind Tesla Inc and Allegheny Technologies Incorporated pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |